PN 03/15: Ofwat welcomes CMA’s final decision on Bristol Water’s price determination appeal

Ofwat today welcomed the outcome of the Competition and Markets Authority’s (CMA) thorough investigation into Bristol Water’s appeal against its price determination. The CMA’s final decision substantially supports and reaffirms Ofwat’s process for setting price limits during the 2014 price review.

When Ofwat set price limits for Bristol Water in December 2014 these provided that the customers of Bristol Water should see a 19% reduction in their average bill by 2020 to £155. Bristol Water appealed that decision to the CMA, arguing the reduction should be less.

Following the CMA’s decision, average bills will now reduce by 16% by 2020. This compares with Bristol Water’s original plan, signed off by its Board, which would have reduced bills by only 6%.

This means average bills will be £160 per year, compared with £187 had Bristol’s case been accepted.

It is now for Bristol Water to challenge itself to improve, and look closely at the way that it runs its business in the future. It needs to deliver a much more efficient service, at a lower cost whilst ensuring that it keep its customers at the heart of its decision making.

Cathryn Ross, Ofwat’s Chief Executive said:

“We welcome the CMA decision. The price review process challenged companies to focus on customers and seek improvements across the whole of their operations.  It delivered real benefits to customers across England and Wales, including a 5% reduction in average bills and continued investment in services to the tune of £44 billion over the next five years.

“While the CMA has slightly reduced the level of bill reductions we set this is still an excellent result for Bristol Water’s customers. It is critical that Bristol Water continues to deliver a safe and secure water service to its customers.

“We hope that Bristol Water will now review its approach to our five-yearly price reviews and take forward these lessons at future reviews.”

Ofwat is now seeking for the CMA’s report to be published, consistent with the transparent process Ofwat undertook in its 2014 price review, and to ensure customers have all the relevant information in respect of their water service.

In future, in its work running up to the next price review in 2019, Ofwat will be putting still more emphasis on companies taking account of their customers’ priorities through customer engagement. Ofwat believes companies should serve their customers in a manner that respects customers’ priorities and aspirations for the services they receive at a price they accept.

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Notes to 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, the environment 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. This release may be of interest to those following these companies: Affinity Water, Anglian Water Services Ltd, Bristol Water plc, Cholderton and District Water Company Ltd, Dee Valley Water plc, Dŵr Cymru Cyfyngedig (Welsh Water), Northumbrian Water Ltd, Portsmouth Water plc, Sembcorp Bournemouth Water Ltd, Severn Trent Water Ltd, South East Water Ltd, Southern Water Services Ltd, South Staffordshire Water plc, South West Water Ltd, Sutton & East Surrey Water plc, Thames Water Utilities Ltd, United Utilities Water Ltd, Wessex Water Services Ltd, and Yorkshire Water Services Ltd.
  3. The CMA’s final decision can be found on www.gov.uk.
  4. Ofwat completed the 2014 price review in December 2014. At that time it set out that Bristol Water should reduce its water only bills by an average of 19% (2012-13 prices) before inflation between 2015 and 2020.
  5. Ofwat’s final decision would have seen Bristol Water’s average bill reduce to £155 (2012-13 prices) by 2020.
  6. As part of the price review process, companies are allowed to ask Ofwat to refer its final determination to the Competition and Markets Authority (CMA). Ofwat referred Bristol Water’s determination in March 2015.
  7. In July 2015 the CMA published their provisional findings.
  8. This is the second time that Bristol Water referred a final determination. In 2010 Bristol Water also appealed their 2009 price review decision to the CMA (then the Competition Commission).
  9. Ofwat is currently seeking a discussion on how the sector deals with future water challenges. It published discussion papers on this in July, including exploring how the sector can do more to take put customers at the heart of decision making, including customer engagement.
  10. Media enquiries to Ofwat Press Office on:
    Simon Markall 0121 644 7696 / [email protected]
    James Sheward 0121 644 7644 / [email protected]