PN 02 /16 Ofwat response to water companies’ bill announcement

  • Below inflation rise on the back of £3 billion Ofwat challenge
  • Companies need to do more to help customers struggling to pay
  • Last year of bills for businesses and other organisations before they can choose retail supplier

Water companies today announced that average bills are set to increase by an average of around £2 – or less than one per cent – across England and Wales.

The below inflation rise follows Ofwat’s decision in December 2014 that average bills should fall by around five per cent, before adjustments for inflation, between 2015 and 2020.

Commenting on the announcement, Cathryn Ross, Ofwat Chief Executive said:

“We are here seeing the fruits of our tough 2014 price review which will mean bills are kept below inflation up to 2020. We challenged companies to listen and respond to their customers’ priorities. Where they didn’t step up, we stepped in. Our challenge led to an additional £3 billion of savings for customers. As well as keeping bills down, we also pushed companies do to even more to improve service.

“Companies will only build trust and confidence with their customers if they deliver. They need to be clear and open about how they are performing. Those who deliver can expect fair returns, while those who fail to meet their customers’ expectations will be hit in the pocket.

“We know that there are many pressures on household budgets and so we challenged companies to provide much more support to customers who are struggling to make ends meet. Under those agreements around one million more people will be eligible to receive help. Some are making good progress in targeting support, while others need to get better at identifying those at risk and helping them. We will keep a close eye on how the sector progresses.”

A recent Ofwat report showed that unpaid water bills are an increasing problem in England and Wales, despite moves to provide support to a million more customers. Awareness of the support available is generally rising but most companies have not achieved their initial targets for customers signing up to social tariffs, which offer cheaper bills to customers who are struggling to pay their bills.

This is also the last year of charging before 1.2 million businesses and other organisations in England will be able to choose their retail supplier from April 2017.

Cathryn Ross said: “We are working with government and the sector to open the market for retail water services in England for non-household customers next year. Over the long term this should result in companies having to raise their game and a better deal for customers, including improved services and lower prices.

“These benefits depend on customers being able to trust that the market is working fairly. So we are making sure customers are genuinely empowered, and where necessary protected, by putting appropriate checks and balances in place.”

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Notes for Editors

  1. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. Its role is to help the sector build trust and confidence with customers and wider society. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future resilient water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.
  2. Water UK today announced details of bill changes from April 2016 to March 2017. This announcement can be found on www.water.org.uk
  3. Ofwat sets limits on charges for water and wastewater services every five years. Ofwat’s final determinations for the period 2015 to 2020 were published in December 2014.
  4. It is for companies to decide each year the level at which they will set charges for customers, making sure they do not exceed the overall revenue that Ofwat has allowed them in its final determinations. These are the second set of charges companies will set consistent with these final determination and will come into effect on 1 April 2016.
  5. Government has made the decision to offer choice for retail services for non-household customers from 1 April 2017. Retail services include customer facing activities, such as billing, account handling and customer queries, as well as water efficiency advice.
  6. The Open Water programme was set up by the UK Government to deliver the competitive market for retail services. The key organisations responsible for delivering the new market are Defra, Ofwat and MOSL. More information about the Open Water programme can be found on www.open-water.org.uk
  7. Media enquiries to Ofwat Press Office on: Benedict Fisher 0121 644 7642 / [email protected]