Customers of five water companies face higher than expected bill hikes | Money News Aitrend

Customers of five water companies are facing higher-than-expected bill rises to combat inflation after the companies challenged limits imposed by the sector regulator.

The Competition and Markets Authority (CMA) has been called in to review Ofwat’s determinations on what Anglian Water, Northumbrian Water, South East Water, Southern Water and Wessex Water could charge customers from 2025 to 2030.

The CMA panel said on Thursday: “The group has provisionally decided to allow 21% – or £556 million of additional revenue – of the total £2.7 billion requested by the five companies.

“This additional funding is expected to result in an average 3% increase in bills for customers of the companies in dispute, which is in addition to the 24% increase for customers of these companies expected under Ofwat’s initial determination.”

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The ruling showed that residential and business customers in Wessex faced the biggest increase – on top of the increase agreed by Ofwat – of 5%, leaving their average annual bills at £622.

Customers in the South East and South will see increases of 4% and 3% respectively, while those in Anglian and Northumbrian are expected to absorb the lowest percentage increase of just 1%.

The South East had requested the largest increase – 18% on top of the 18% increase it had been given over a five-year period.

The companies exercised their right to appeal after Ofwat published its final decisions on what they could charge at the end of last year.

They essentially argued that they could not meet their regulatory requirements under the controls, amid a rush to shore up crucial infrastructure, including storm sewers, water pipes and storage capacity.

Crisis-hit Thames Water was initially one of them, but later withdrew its objection pending the outcome of ongoing efforts to secure its financial future through a change of ownership.

Chair of the CMA’s independent panel, Kirstin Baker, said: “We have found that water companies’ demands for significant bill increases, over and above those permitted by Ofwat, are largely unjustified.

“We understand the real pressure on household budgets and are working to keep increases to a minimum, whilst ensuring there is funding to make essential improvements at a reasonable cost. »

Ofwat, which has faced industry criticism in the past for a focus is on keeping bills low to the detriment of investments, should be replaced by a new super regulator according to plans confirmed this summer.

He has faced outrage on many fronts, including over sewage spills and giving rewards for failure.

A spokesperson for industry lobby group Water UK said: “The Competition and Markets Authority’s findings are provisional and water companies will need time to understand the full details.

“If these decisions stand, the CMA will have reinstated more than half a billion pounds of funding. This overturns the limits set by Ofwat on the amount five companies can invest in their infrastructure. This process has unfortunately been necessary to secure the investment our economy and environment need.

“As the CMA recognises, the system requires urgent reform. The government has said it will abolish Ofwat and introduce a new regulator. The country needs this to happen as soon as possible.”

Water Minister Emma Hardy said in response to the CMA’s decision: “I understand the public’s anger at rising bills – which is why I expect every water company to offer appropriate support to anyone struggling to pay.

“We have ensured that investment goes into infrastructure upgrades, not bonuses, and we are creating a tough new regulator to clean up our waterways and restore confidence in the system.

“We are working to ease the cost of living pressure on households: we have frozen fuel taxes, increased the minimum wage and pensions and lowered mortgage rates, putting more money in people’s pockets. »