Household charging trials

Customer with their back to camera, holding their front door open and a customer support person standing in the doorway, smiling and speaking to themAn increasing number of customers are struggling to pay their water bills and the rise in the cost of living puts a sharper focus on affordability challenges. At the same time, climate change poses significant long-term challenges to the sector. A wide range of tools are needed to tackle these issues and new approaches to setting charges can play a role to support affordability, as well as other objectives such as incentivising water efficiency.

We called on water companies to conduct charging trials that are accompanied by effective customer engagement and support. The trials are aimed at supporting affordability, and potentially other sustainability goals such as reducing demand. See our September 2022 consultation and March 2023 conclusions.

On this page you can find more information about:

This page was last updated on 19 April 2024

 

Current charging trials

Details
Affinity Water started a trial of a Rising Block Tariff in October 2023 with around 1,500 households, predominately in the Stevenage area. These customers receive an initial amount (or ‘block’) of water for free, and pay progressively higher prices for using larger volumes of water (the “middle” and “end” blocks). The company expects at least two out of three homes in the trial to pay less for their water than they do currently. More information at affinitywater.co.uk/news/tariff-trial and Being a part of our WaterSave Tariff trial (affinitywater.co.uk).
South West Water is trialling its Smart Saver tariff from 1 April 2024. This Rising Block Tariff will charge around 500 customers a cheaper rate for using a lower amount (or ‘block’) of water and progressively higher prices for using larger volumes of water. South West Water has assessed that 90% of their customers will see lower bills on this trial. They will be offering water efficiency advice and devices to help all customers participating to reduce their bills. More information at South West Water launches innovative new trial to make customer bills fairer and Smart Saver | Tariff Trials | South West Water.
Anglian Water is trialling two seasonal tariffs from 1 April 2024. These tariffs charge more for water taken in the summer (May-August) than in the winter (September-April). The trial will apply to customers in the Norwich and Lincoln areas. Anglian Water has estimated that 2 out of every 3 customers would be no worse off or marginally better off under the seasonal tariffs compared with its standard charge.
South Staffs Water launched a trial in April 2024 for household customers who struggle with affordability but do not qualify for its Assure social tariff. The trial uses a ‘rising block’ structure, with the first block charged at the Assure rate and applying to essential use only. All water above essential use is charged at the standard rate. More information at customer-charges-south-staffs-final-2024.pdf (south-staffs-water.co.uk).
United Utilities will trial multiple reward schemes during 2024 that incentivise households to be more water efficient in return for the opportunity to win credits on their water bill. This lottery-style scheme will include up to 2000 customers per trial who have engaged in water efficiency measures such as having a water meter fitted, installing a water butt or asking for a household water efficiency audit. A proportion of those in the scheme will win a year’s worth of water as a credit to their bill. More information at household-charges-scheme-2024-25.pdf (unitedutilities.com).

Other developments

Portsmouth Water is running ‘saver session’ experiments to understand how it can influence customers to use less water over a 6-month window. It will ask participating customers to save water over different time periods ranging from one hour to one month with a view to changing behavioural patterns. Customers will be incentivised through reductions in their bills for registering to take part in each saving session and for reducing their usage over the saving session compared to their typical usage in those periods.

Proposed charging trials for 2025-30

All companies expect to trial new charging structures by 2030 and some of them plan to introduce them more widely for other customers if the trials are successful.

In ‘Summary of water companies’ published plans for household charging trials‘, which we published on 12 January 2024, we set out information on the trials and other measures that water companies have included in their published business plans for 2025-30 for the 2024 price review.

This document allows customers, companies and other stakeholders to review and compare companies’ plans to use charging trials to support households, in terms of both affordability and sustainability by 2030.

This document is for information only. We do not offer observations or critiques of any company’s plans because we are assessing plans separately as part of PR24 – our quality and ambition assessments (QAA): we will publish the results of the QAA as part of our draft determinations in the 2024 price review. Find out more about the 2024 price review.

Find out more about charging and charging schemes.

 

How we regulate charges to protect customers

We limit the amount of revenue each water company can collect in total from its customers each year. We also have rules that require companies to set fair charges for different classes of customer. Together, these measures help to stop companies from overcharging customers and means they will be protected during charging trials. You can find out more about how we set these revenue caps on our price review web page and more about how we regulate the setting of charges on our charging web page.

Our most recent customer research suggests around 6% of customers receive financial support for their water bill. If you are worried about paying your bills, contact your water company to see what assistance they can offer. You can also contact CCW to get more information about the different types of help available.

Find more about our work to protect customers, including the support they receive paying their bill

 

How household charges are currently structured

Water companies in England and Wales currently set their charges for household customers in different ways, depending on whether customers are metered or unmetered.

  • Unmetered customers pay a fixed amount, in total, for their water. This usually comprises a small, fixed charge (the “standing charge”) and a separate fixed amount based on the rateable value of their property or an assessment of the expected water use.
  • Metered customers also pay a standing charge, but then pay per litre of water consumed. The price per litre is the same, irrespective of how many or when they are consumed.
  • Some customers will also be eligible for social tariffs or the WaterSure scheme, which limit the size of the customer’s water bill.

 

Trialling new charging structures

There are several ways for companies to structure their charges, which could provide benefits and incentives to customers. For example,

  • water companies could charge less per litre of water consumed up to a certain amount, and more per litre above this amount. This could help to reduce discretionary water consumption and make water bills more affordable. This is called a ‘Rising Block Tariff’
  • use seasonal charging, where the price per litre is lower in the winter and higher in the summer
  • reduce bills for homes with water butts and permeable driveways, which can help to reduce risk of flooding and pollution to rivers and bathing water, particularly at times when water is scarce

We set out some examples of charging structures in our September 2022 consultation on charging innovation to support affordability.

To learn from and better understand the likely effects of moving to new ways of setting charges, we are encouraging water companies to conduct trials of these new charging structures. This would typically involve a small number of customers paying new charges for the duration of the trial. This would allow the sector to learn things like:

  • how the charges can be set to help lower-income customers with their water bills
  • how best to engage with and support customers, for example to help customers understand the new charges, get financial support (such as access to social tariffs) or help with household leaks
  • how effective the charges are at saving water, supporting the health of rivers and alleviating water scarcity

 

Good practice principles for charging trials

We will support charging trials that are consistent with good practice principles. Companies are responsible for their own charges and for designing and running their trials to test new charging structures. They will design, implement and evaluate trials that are specific to their own and their customers’ needs and circumstances. Because trials involve real customers and there are risks associated with any changes to charges, it is important that trials that are of a high standard.

Our good practice principles for charging trials are:

  • Careful planning and design means trials need
    • to be based on an understanding of their customers’ needs and characteristics.
    • to have a clear objective, a statement of what the trial is trying to achieve and why.
    • to be based on charging policy that estimate the likely impact on customers, has identified mitigating measures and has robust plans for engaging and supporting customers.
    • to be based on a fair and neutral approach, to make sure findings are robust and unbiased, be large enough to be meaningful but small enough to manage.
    • to reflect consistent principles to aid comparability across companies.
  • Good customer engagement and support means
    • Companies will need to communicate and engage effectively with their customers, explaining the purpose of the trail, so that customers feel that they have the information they need to react appropriately.
    • Offering support for customers struggling to pay, informed by the estimate of potential impacts
    • Supporting customers in reducing leakage and discretionary water consumption, including repairing leaks and providing advice on water efficiency
    • Supporting the full diversity of customer needs, for example communication in an accessible format or help with meter reading to monitor water consumption.
  • Maximising learning means
    • Using experts where needed, for example, to design a consistent basis for evaluating trials.
    • Collaborating with other companies to develop consistent and robust trials, including how they will be evaluated
    • Sharing learning with each other, to improve the effectiveness of future trials and wider implementation of more innovative charging approaches.

 

Sharing information about charging trials

When companies trial new charging structures or research how charges are set in other countries and in other sectors, they should share this information with the whole sector. This can allow water companies to widen and deepen their understanding of different approaches, and analyse results from a larger number of different trials, to see what the best approach could be for their customers.

To help to facilitate this learning, we use this page to link to published information that could help the sector to understand more about different approaches to setting charges and the potential effects this could have on customers and their consumption. In addition we have established a shared space for water companies and CCW to share information such as trial design, challenges and opportunities around implementation, evaluation of results and analysis of customer feedback.

If you have any research or analysis that you consider would be useful to share with the sector, please get in touch at [email protected]. We are primarily looking for research on:

  • the approach to setting charges in other relevant sectors or in the water sectors in other countries;
  • guidance on how to set up, run and analyse charging trials; and
  • analysis of the results of charging trials.

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