Most water and sewerage services in England and Wales are not provided in competitive markets. Most people receive their water services from a licensed monopoly company. Only business customers are able to choose their supplier.
Because competition is limited, there is a risk that these companies will not deliver the services their customers want. They may also charge higher prices to increase their profits. This is why they need to be regulated. And it is why Ofwat was created when the water and sewerage sectors were privatised in 1989.
One of the ways we regulate is to set the price, investment and service package that customers receive. This includes controlling prices companies can charge their customers. When we do this, we must balance consumers’ interests with the need to ensure the sectors are also able to finance the delivery of water and sewerage services. We also need to ensure sure they are able to meet their other legal obligations, including their environmental and social duties.
We currently carry out a review of these price limits every five years. We will carry out an additional review of the non-household retail price control in 2016.