Water companies must do more to help customers in debt, or at risk of being in debt, to pay their bills. Performance among water companies in dealing with bad debt varies, but the sector as a whole lags behind its peers. We have set out recommendations for companies to improve their debt management.
We have looked at what companies are doing now to reduce levels of bad debt and other customer costs, and compared water companies’ performance in other sectors.
The results are that
- water companies have improved their performance on bad debt in recent years but they are consistently out-performed by other sectors
- bad debt is worse in areas of high deprivation, but some companies do better at managing bad debt even though they have significant deprivation
- some water companies do better than others, but even the best water companies do not compare well against other sectors
- water companies could be doing much more to enable customers in debt, or at risk of being in debt, to pay their bills because they do not all use best practice in debt management
Recommendations to companies
As part of our 2019 price review, we expect water companies’ business plans to demonstrate clearly how they will improve bad debt management in the years 2020-25. When we review companies’ plans, this is one of the areas we will be expecting them to deliver a step up in their services and step down in their costs.
But they can take action now to put in place best practice. Tackling the issue of bad debt will help improve customer service, resilience, reduce costs and make bills more affordable for all customers now and for the future.
- Retail Services Efficiency, PriceWaterhouseCoopers 28 September 2017 (updated on 29 September 2017)
- Retail services efficiency supporting data, 29 November 2017
- Speech from David Black, Bad debt and residential retail efficiency event, 28 September 2017
- Slides, Bad debt and residential retail efficiency event, 28 September 2017
- Delivering Water 2020: Consulting on our methodology for the 2019 price review, Ofwat, 11 July 2017
- Vulnerability focus report, Ofwat, 18 February 2016
- Affordability and debt 2014-15, Ofwat, 1 December 2015
- Dealing with household customers in debt, Ofwat, 1 September 2015