Under Final Determinations announced by Ofwat today, average water and waste water bills will come down by 5% in real terms over the next five years – a decrease in the average bill across England and Wales of £20 by 2020.
Water companies have listened hard to their customers and responded by putting in place plans that ensure bills remain affordable while continuing to invest billions each year to deliver the service improvements their customers want.
In 2015-2020, companies in England and Wales will increase their spending on a package of affordability measures (currently worth around £40 million) in addition to the social tariffs they provide for struggling customers.
To keep customers’ bills down in this period, the amount the companies provide to their debt and equity investors, who the sector relies on to fund investment in high-quality services to customers, will be reduced.
But companies will still invest more than £44bn to deliver their customers’ priorities, including tackling leakage, preventing supply interruptions and better sewage treatment to help keep rivers, coasts and beaches clean.
The UK water industry contributes at least £15bn to the UK economy each year. The investment over the next five years ensures water companies will continue to provide a wide range of jobs in every region and essential infrastructure to help spur growth.
Pamela Taylor, Chief Executive, Water UK, said: “Companies have worked extremely hard to deliver falling bills for customers while continuing to invest billions to improve services even further.
“Our members have done more than just talk about responding to a cost of living crisis, they have taken action to deliver help where customers really need it, by reducing their bills.”
Ofwat’s announcement today is another key milestone in the current price review (PR14), which began more than two years ago.
This price review involved the water industry’s biggest-ever consultation, with more than 250,000 customers in England and Wales involved in setting their companies’ priorities for the next five years.
As part of the price review process, companies submitted business plans to Ofwat based on the needs and priorities of their customers and communities they serve.
These needs and priorities, and the investments that are required to meet them, vary across the country – for example, further improvements to the quality of beaches to boost local tourism in coastal areas, increasing the resilience of water supplies to droughts in water-stressed areas, and reducing sewer flooding.
The regulator has set a tough review, which has challenged companies to balance a range of priorities including delivering environmental improvements while remaining financeable and keeping bills affordable.
As part of the review, companies have also been required to set themselves more stretching targets and outcomes and greater penalties for poor performance.
Companies will now consider their Final Determinations carefully before deciding whether to accept them or to appeal to the Competition and Markets Authority.
Water UK Communication
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