Responding to the provisional findings from the CMA, Rachel Fletcher, CEO at Ofwat, said:
“We wanted this price review to be demanding, making companies more efficient, improving their performance for customers, and closing off easy returns for investors. Our aim is for companies to give everyone the high quality and resilient services they deserve, while looking after the natural world and keeping bills affordable.
“To support companies in making this transformation, we have sanctioned customer funding of more than £50bn over the next five years. Nonetheless, our final determinations demanded a step change from the sector, so it is unsurprising that four companies considered the challenge uncomfortable.
“We are already seeing examples of positive change from that challenge: last year saw the biggest reduction in leakage for over two decades, bills are falling, and the best performing companies are already on track to make significant improvements in service.
“We respect the CMA and will look closely at their analysis before submitting further evidence to inform their final decision in December. Over the coming weeks we will make the case to the CMA to ensure customers get a good outcome, and that it is not too easy for investors to make returns in this sector.
“In the meantime, our focus will remain on pushing companies to deliver more for customers and the environment and we will continue to hold them to account for doing so.”
Background information
- In PR19, Ofwat announced a spending package of £51bn for water companies over a period of 5 years. This includes £1bn of investment that wasn’t requested by the companies to address long-term challenges, and around a quarter of the overall package (£13bn) was earmarked for investment dedicated to providing resilient services and a better environment
- Customers were due to see a reduction in average bills of £50 before inflation
- Ofwat set tough new service levels to reduce leakage and supply interruptions, help two million customers who need extra support, invest £1bn to protect communities from flooding, and reduce river pollution by a third
- 13 of the 17 water companies accepted Ofwat’s settlement and have been focused on delivering for customers against these targets