Customers of five water firms are facing higher than expected rises to their bills after the companies disputed limits imposed by the industry regulator.
The Competition and Markets Authority (CMA) was 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 2025-30.
The CMA’s panel said on Thursday: “The group has provisionally decided to allow 21% – an additional £556m in revenue – of the total £2.7bn the five firms requested.
“This extra funding is expected to result in an average increase of 3% in bills for customers of the disputing companies, which is in addition to the 24% increase for customers of these companies expected as part of Ofwat’s original determination.”
The decision showed that Wessex household and business customers faced the largest increase – on top of the rise agreed by Ofwat – of 5%, leaving their average annual bills at £622.
South East and Southern customers will see rises of 4% and 3% respectively while Anglian and Northumbrian’s are set to soak up the lowest percentage increase of just 1%.
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The companies exercised their right to an appeal after Ofwat released its final determinations on what they could charge at the end of last year.
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They essentially argued that they could not meet their regulatory requirements under the controls amid a rush to bolster crucial infrastructure including storm drains, water pipelines and storage capacity.
Crisis-hit Thames Water was initially among them but it later withdrew its objection pending the outcome of ongoing efforts to secure a change of ownership.
Chair of the CMA’s independent panel, Kirstin Baker, said: “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.
“We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost.”
Ofwat, which has faced industry criticism in the past for an emphasis on keeping bills low at the expense of investment, is set to be replaced by a new super regulator under plans confirmed in the summer.
It has faced outrage on many fronts, especially over sewage spills.
The watchdog has been accused of allowing rewards for failure in the past which allowed the sector to put profits before people.
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