Ofwat letting water firms charge twice to tackle sewage, court to hear | Water
Campaigners will claim in court on Tuesday that Ofwat illegally allowed water companies to charge customers twice to fund more than £100bn of investment to reduce sewage pollution.
Lawyers for River Action say the bill increases allowed by Ofwat – averaging £123 per household per year – mean customers will be paying again for improvements to ensure environmental compliance that should have been funded from their previous bills.
In what has been dubbed the PR24 decision, Ofwat has approved a £104bn cash injection from water companies by the end of the decade to tackle record levels of sewage pollution in rivers as a result of many years of underinvestment.
Customers of some of the worst-performing companies are facing huge bill increases. Thames Water customers are being charged 35% more, with average bills rising from £436 to £588, and Southern Water customers are being charged 53% more, rising from £420 to £642 on average annually. United Utilities is increasing its bills by 32% to an average of £535 per year.
Using the Windermere case as an example, lawyers argue customers were unlawfully charged twice. They argue that any investment to repair historical underinvestment in infrastructure should be paid for by shareholders, not customers. Under Ofwat rules, customers only need to pay for new infrastructure investments, not investments that would bring a company into compliance with environmental legislation.
River Action’s head of legal, Emma Dearnaley, said: “It is essential that the public does not pay twice for water companies’ past failures to invest in improvements to stop sewage pollution. But River Action is concerned that Ofwat’s approach means customers may have to pay again. Meanwhile, deteriorating infrastructure continues to spread pollution into rivers and lakes across the country that should have been clean decades ago.”
The lawsuit argues that the billions of dollars Ofwat has approved should result in regulatory compliance by water companies and ensure customers are charged fairly going forward.
Ricardo Gama of Leigh Day, who represented River Action at the hearing in Manchester, said: “Our client believes this case shows that Ofwat has failed to ensure that water bills are used for infrastructure improvements.
“River Action will argue that money that could and should have been used to deliver essential infrastructure improvements has now run out and customers are being asked to foot the bill for these improvements a second time.”
The hearing will take place at Manchester civil justice center on Tuesday and Wednesday.
A spokesman for Ofwat said: “We reject River Action’s allegations. “The PR24 process has carefully reviewed business plans to ensure customers receive fair value and the investment is justified.
“We have stated that customers should not have to pay twice for companies to re-comply with environmental permits and have included appropriate safeguards in our PR24 findings, where we will monitor this closely and take action if necessary. Due to the ongoing hearing, we are unable to comment further at this time.”
