Water companies told to cut bills by £3 a year

Published 26th Nov 2009

Ofwat, the water regulator, today ordered Britain's utility companies to cut the average water bill by a less-than-expected £3 to take the average bill to £340 a year.

The reduction is below the £14 price cut suggested in July by the regulator in draft recommendations on the amount that Britain's 22 water companies can spend on their networks between 2010 and 2015. The draft proposal would have cut the average water bill to £330.

Ofwat has been heavily lobbied by water companies to limit cuts for the next five years as they contend with falling revenue from recession-hit customers, which has affected funding on infrastructure.

However, the regulator has kept the return that water companies are allowed to make on their capital, which is critical for maintaining dividends, at 4.5 per cent after tax. In response, shares in Severn Trent rose 49p to £10.55 and United Utilities gained 12.9p to 496.2p.

Regina Finn, Ofwat’s chief executive, said: "People can shop around for the best deal on many things, but not water. Our job is to do this for them. Customers have told us that they want us to keep water and sewage charges flat while maintaining a safe, reliable supply of water. That's what we've delivered.”

The regulator’s decision will see more than £22 billion invested in maintaining and improving services to customers, with household bills remaining broadly flat until 2015.

Ofwat said that its ruling meant that average bills would be about £34 lower by 2015 than the figure that the companies were requesting.

The companies now have until January to decide whether to appeal against the ruling to the Competition Commission.

The Times reported earlier this week that Thames Water, Britain’s largest water group, was considering a legal challenge to the ruling.

Source: ' Times '

View All Latest Articles