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Two major milestones for the water industry

We’ve had two major milestones in the last fortnight, both very important for the water industry in different ways.

The first is the initial assessment from Ofwat on water companies’ draft business plans for England and Wales from 2020 to 2025.

The draft plans were created after seeking the views of 5 million customers to understand what’s most important to them. Taken together, those plans would mean ten years of falling bills, the most ambitious leakage programme in 20 years, and an expanded five-year investment programme of more than £50 billion.

It was heartening to hear Ofwat Chief Executive Rachel Fletcher acknowledge that companies had listened to the customers they serve. She said: “We’re seeing an increased focus on the things closest to people’s hearts such as keeping bills affordable, cutting leakage, protecting the environment and helping those most in need”.

And as acknowledged by Environment Secretary Michael Gove in a letter to our Chair following Ofwat’s assessment, there is a step change in support for vulnerable and less well-off customers – the plans would nearly double the help for people who struggle to pay their bills. Wildlife and the wider environment would benefit from the plans too, with 8000km of rivers due to be improved.

In what is a normal part of the price review process, a number of companies will now work with Ofwat to understand and address issues raised by the regulator.  There’s no doubt that that will involve some challenging conversations - not least in striking the right balance between bills on the one hand and, on the other, investment which benefits customers and the environment.

Which brings me to the other significant milestone, which was our announcement of the industry’s investment for the coming year and changes to the average bill.

We revealed that water companies in England and Wales will invest more than £8 billion in 2019-20, coming at the end of a 5-year £44 billion spending commitment.

Over that 5-year period more than 370 million litres of water a day will be prevented from leaking from pipes, nearly 5000 fewer properties will be flooded with sewer water, and more than 50 beaches will have cleaner water. Water companies are also on track to deliver on a 5-year commitment to deliver financial support to an additional 1 million people by 2020, with all companies having social tariffs in place to provide reduced water bills for customers who struggle to pay.

But although overall investment continues at high levels, the average household water and sewerage bill in England and Wales for 2019-20 has been kept down – the average bill will change by less than inflation for the sixth year in a row. Overall, bills are going down by more than 5% in real terms between 2015 and 2020, and by 2025 there will have been over a decade of falling bills once inflation is taken into account.

Falling bills, increasing investment, more focus on customers and communities; these are all signs that the water industry is working hard in the public interest. There is much to do to achieve our ambitions for the future, but we will do everything we can to live up to the deservedly high expectations of our customers.

This blog post first appeared in Utility Week