England and Wales Water Charges to Fall
We don’t get to tell you often enough that your bills are going to fall slightly over the next few years. But according to England and Wales water regulator Ofwat, that is just what is going to happen to your water bills.
Not including inflation, household water bills will be falling by an average of 5% by 2020. In terms of real money, this means that water bills will be around £20 less than they are today – depending on the area you live in and how much you’re paying now.
Out of the 18 water and sewage companies in England and Wales, only three had yet to have their price terms already set by Ofwat – Bristol Water (a water-only company), Thames Water and United Utilities.
These three firms have now had their price changes determined, with United Utilities informed it must cut its costs by 3%. Thames Water has been told that its rates need to fall by 5% – and not the rise of 3% it had previously proffered – and Bristol Water has to cut its own charges by a whopping 21%.
Ofwat have been able to order these price drops because of a sustained period of low interest rates, allowing the companies to borrow more cheaply for infrastructure projects which are among their most costly outgoings.
All of the water and sewage companies will still be able to add inflation, as measured by RPI, and some critics have suggested that this could actually result in the consumer paying more than they are already.
However, the CCW (Consumer Council for Water) said that these changes are the good news they appear to be for the customer.
“Most water companies and the regulator have listened to customers and delivered a deal which reflects the services they want, at a price most find acceptable,” stated CCW chief executive Tom Smith.
Cathryn Ross, Ofwat chief executive, explained that the ruling enables water companies to invest around £44 billion (about £2,000 per household) over the next five years. She said that the changes will mean customers getting more for their money.
“Where companies stepped up to do the best they could for their customers, we did not need to intervene,” she said. “But where companies fell short, we stepped in to make sure customers get a good deal. Now the hard work begins!”
She added that companies will only be able to gain the trust and confidence of their consumers if they deliver and that those that do, won’t struggle at all in the coming five years. “Those that don’t will be hit in the pocket and face a tough five years instead,” she concluded.
The companies have two months to accept the terms. If they don’t, they can seek a referral from the Competition and Markets Authority. Either way, we can look forward to the changes coming into effect from April next year.