Water watchdog gives Ofwat seven out of 10 for water deal
The Consumer Council for Water has given Ofwat a mark of seven out of 10 for its final decisions on water price limits in England and Wales from 2010 to 2015.
While there is some good news for water customers as on average bills will remain about the same, the watchdog is concerned that Ofwat has eased off on water companies' efficiency targets - causing higher bills for some water customers.
Ofwat has announced that, before taking inflation into account, average bills will remain broadly flat for most customers across England and Wales, with the average annual water and sewerage bill moving from £343 to £340 by 2015.
The prices announced vary from company to company, so depending on where they live, customers will face a range of price changes from a reduction in average annual bills by as much as seven per cent, to an increase in bills of 13 per cent before inflation.
Water watchdog gives Ofwat seven out of 10 for water deal - but is concerned about impact for some customers.
Customers of companies such as Essex and Suffolk Water (13%), Bristol Water (7%), Southern Water (5%) and Thames Water (3%) will all see rises in average bills. South West Water customers without a meter could see a 29 per cent rise in bills.
Today's announcement suggests that Ofwat was arguably unrealistic in its draft decisions back in July when it suggested that average bills would fall by £14. At this point, eight out of ten customers told the Consumer Council for Water that this deal would be acceptable.
However, Ofwat had left out some important elements of customers' priorities such as reducing the risk of sewer flooding; maintaining pipes, sewers and treatment works; securing safe, reliable water for the future, and reducing leakage. The Consumer Council for Water lobbied the regulator hard to include these priorities - improvements which could have been made while still allowing price reductions.
In its final decision, Ofwat has included many of these customer priorities but it also has significantly eased the pressure on water companies to be more efficient - meaning that some customers will face higher bills than they are willing to pay.
Dame Yve Buckland, Chair of the Consumer Council for Water, said: "The overall deal will be acceptable to many customers who told us that they wanted bills to remain flat, and over England and Wales, average bills are actually going down by one per cent. However, we would give the deal a seven out of 10 because Ofwat has eased off on the companies, meaning that some customers will face higher bills.
"There is also a risk that bills may creep up over this five years with further work to be done for the environment, and other costs.
"We were surprised that Ofwat has allowed water companies to come back for higher prices if customer debt increases. If water companies fail to collect customer debt, they can ask for more money from Ofwat, and pass that cost on to all of their customers.
"Even though prices are generally flat, there is still an issue of affordability for many water customers. When we ask them ‘are your water bills affordable?' one in five customers tells us no. We are concerned that this reduction in prices still isn't sufficient to solve the problem, so we will continue to press government to provide better support for such households.
"This is the first time that the Consumer Council for Water - as an independent body representing water customers - has been involved in the price setting process. We negotiated with each water company and Ofwat to make sure they took customers' views into account and this deal is still more than £50 a household better than in 2004."
Water companies can appeal to the Competition Commission if they are not happy with Ofwat's final decision and, if they do so, the Consumer Council for Water will continue to strongly represent water consumers throughout this process.