Water bills to rise further for millions after appeal
Millions of households in England will have to pay higher water bills than previously announced after five water companies appealed to the UK’s competition regulator.
Anglian, Northumbrian, Southern, Wessex and South East companies’ appeals to the Competition and Markets Authority (CMA) were upheld and they were given permission to increase the bills even further.
They argued that price increases set by regulator Ofwat, which average 36% over the next five years, were not enough to deliver the necessary investment in infrastructure.
The CMA said the five companies could increase their bills by an average of 3% more than the original Ofwat decision as borrowing costs rise.
Five water companies serve more than 7 million household and business customers and were demanding much larger increases than were given on the bills.
An independent group of experts appointed by the CMA said firms wanted to increase billings to generate a total of £2.7bn of extra income, but allowed only 21% of this, or £556m of additional income.
Kirstin Baker, who chairs the group of experts appointed by the CMA, said: “We found that water companies’ demands for significant increases in bills, over and above those allowed by Ofwat, were grossly unfair.”
“We understand the real pressure on household budgets and have worked to keep increases to a minimum, whilst ensuring there is funding to deliver significant improvements at an affordable cost.”
Water companies finance most of their investment plans by borrowing. The CMA said one of the reasons it allowed the increase was because interest rates on these loans were rising, making it more expensive for firms to deliver on their plans.
Troubled firm Thames Water also called for higher price increases but postponed its case until the end of October. tries to fix a rescue bid.
Water companies were told by authorities to repair old infrastructure that was found to be the cause of much of the river and water pollution. Environment Agency says serious pollution incidents caused by water companies It increased by approximately 60 percent in one year.
The government’s water minister, Emma Hardy, said she expected every water company to “offer appropriate support to anyone struggling to pay”.
David Henderson, chief executive of Water UK, which represents water firms, said the CMA’s findings would lead to an additional increase of “£1 per household per month” for customers of water firms who apply.
Asked by the BBC’s Today program why firms could not pay for the necessary upgrades, Mr Henderson said shareholders had already invested large sums of their own money and eight water firms would make losses in 2024.
“Them [investors] “don’t have to put money into this sector, they don’t even have to put money into this country,” he said, adding that many “haven’t made a profit in years. This is not an industry flush with cash. It is an industry that provides vital infrastructure.”
The CMA’s decision, which is provisional and must be approved by Ofwat, means Anglians and Northumbrians should be allowed to increase their bills by 1%, Southern by 3%, South East by 4% and Wessex by 5%.
