PN 11/13: Water companies submit business plans to Ofwat

2 December 2013 (table updated on 6 December 2013)

Ofwat has confirmed that water companies have submitted their business plans for the period 2015 – 2020.

Ofwat will now analyse and challenge companies’ plans – and proposed bill changes – to make sure customers get the right level of service for the right price, while ensuring companies can raise finance to continue to invest in the sector.

Jonson Cox, Ofwat’s Chairman said:

“Ofwat challenged companies to listen carefully to their customers in preparing their plans. Our board made clear that current economic circumstances gave companies an opportunity to deliver falling bills in real terms over the coming five years while maintaining substantial ongoing investment. ”

Cathryn Ross, Ofwat’s Chief Executive Officer said:

“Ofwat’s job is to make sure that customers get a fair deal from water companies. We will now carry out an independent, rigorous process to analyse and challenge companies’ plans to ensure that happens.”

In April, Ofwat’s Board will announce its decision on the quality of companies’ plans, including how well they have taken account of their customers’ priorities.

Companies which deliver plans that Ofwat judges outstanding across the board will benefit from a fast-track approval process; plans requiring some intervention will go through a standard process while any company whose plan has significant shortcomings will be asked to resubmit its plans.

Final decisions on prices will be made by January 2015, with new bills coming into effect in April 2015.

Notes to Editors

1. The Water Services Regulation Authority (Ofwat) is the economic regulator of water and sewerage companies in England and Wales. It exercises its powers in a way that it judges will protect the interests of consumers, promote value and safeguard future water and sewerage services by allowing efficient companies to carry out their functions properly, and finance them.
2. Links to further details of each companies’ business plans will be made available on www.ofwat.gov.uk
3. Media enquiries to Ofwat press office on:
   Benedict Fisher 0121 644 7642 / [email protected]
   Harbinder Babra 0121 644 7616 / [email protected]

Companies’ proposals for changes in average household bills over five years (2015 – 2020) excluding inflation ^a

The below data has been supplied by companies and has not been verified by Ofwat. Ofwat is still to analyse and challenge companies’ proposals.

This table was first published on 2 December 2013, and was last updated on 22 January 2014. Updates have been provided by Wessex, Anglian and Affinity. These updates have been supplied by these companies and have not been verified by Ofwat.

Ofwat is aware that other companies are considering whether to take their full allowed increase in prices in 2014/15. The figures in this table are based on changes from 2014/15 prices.

Ofwat will update this table if other companies decide to not take up their full allowance next year.

A more detailed version of the below table is available.

a) Companies are allowed to add the RPI rate of inflation to their bills on an annual basis. The figures in this table do not include any forecast of that inflation.

b) The % change for Northumbrian – Essex and Suffolk is for water only bills, as they only provide water services.

c) South West Water’s total change in bill includes a £50 Government contribution in all years.

d) South West Water and Sembcorp Bournemouth Water have brought forward reductions in bills to smooth changes in bills over six years rather than five. This means customers will benefit from lower bills than anticipated in 2014/15. Yet it also means these companies start the 2015/20 period with a lower average bill than they were allowed. This means the figures in this table therefore understate the overall benefit to customers of the approach of these companies.

e) The figures for Thames Water include costs for the Thames Tideway Tunnel – a project to deal with the fact that London’s sewerage system can no longer cope with its growing population and the volumes of sewage produced. Without the exceptional costs of the Thames Tideway Tunnel, Thames Water is proposing that the average water and sewerage bill would reduce by 1% between 2015 – 20 (excluding the forecast impact of inflation).

f) Changes in Anglian Water and United Utilities bills are presented after taking into account an estimate of the impact of a one-off discount which will be applied to customer bills in 2014-15. This means customers will benefit from lower bills than anticipated in 2014-15. Yet it also means both companies will start the 2015-20 period with a lower average bill than they were allowed. This means the figures in this table therefore understate the overall benefit to customers of the approach of these companies.

g) Wessex Water and Yorkshire Water have announced they are not taking up their allowed increase in prices in the year 2014/15. Affinity Water has also decided that it will not take up part of its allowed increase in prices for household customers in 2014/15. This means customers will benefit from lower bills than anticipated in 2014/15. Yet it also means these companies start the 2015/20 period with a lower average bill than they were allowed. This means the figures in this table therefore understate the overall benefit to customers of the approach of these companies.

Further note: Ofwat is aware that other companies are considering whether to take their full allowed increase in prices in 2014/15. The figures in this table are based on changes from 2014/15 prices. Ofwat will re-issue this table if other companies decide to not take up their full allowance next year.