Ofwat’s chair, Jonson Cox, has signalled that water customers could be at the start of “the decade of falling bills” as he suggested prices could fall in real terms until 2025 at least. Speaking at the Utility Week Congress yesterday, Cox said that managements of water companies needed to “step up and improve service and cut bills.”
Following the event, Ofwat’s chair elaborated further, saying that “water companies must be exemplars and the spotlight – both from Ofwat and the press – will expose those who fall short.”
Cox went on to say that “while overall, the sector has improved its delivery for customers massively over the past few decades, the behaviour of a handful of the big water companies has cast doubt over every other company. Customers often trust their local water company, but when firms construct highly complex, offshore capital structures, they do so at a cost to customer trust.”
Ofwat has already made progress in driving changes to the structure of company boards and introducing new levels of transparency in the sector and Cox confirmed this would remain a priority.
Referring to the upcoming price review, Cox said that he sees PR19 as “helping to deliver even more for customers, with stretching performance commitments, and a tough challenge on efficiency”. In a warning to water companies, he said that “more than any price review I’ve ever known, this will be the most challenging.” But the price review, he said, would also “present more opportunities for those companies that break new ground and deliver more than ever before for their customers.”
Cox also said that in other, non-monopoly sectors “it is every day business for companies to strive to cut bills and improve service” and that he wanted to see “more of that mindset in water, too.”
Ofwat’s chair also said he sees the upcoming price review as likely to set “a new record for the lowest ever regulated cost of capital for water”. This means that the returns for companies are likely to be even lower – so to deliver returns for their shareholders, companies need to achieve even more for their customers, for even less.
And this lower return base could also see water bills continuing to fall from 2020-2025, carrying on with the trend of a fall in the current period of 2015-2020.
“This price review”, Cox said, “will remind companies who is their boss: customers. If their plans are not based on customer participation and engagement – they will get what they deserve from Ofwat”.
Ofwat Press Office:
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