Water companies 'on notice' to explain price hikesRegulator says industry should justify high bills

23 October 2008

Tap

Water regulator Ofwat has told water bosses to justify their plans to hike water bills to fund improvements to pipes and other infrastructure.

Speaking yesterday on BBC Radio 4’s The Today Programme, Ofwat chief executive Regina Finn said that the money the industry is planning to spend must be justified.

Water companies in England and Wales have proposed increasing the average household bill by around 9% above inflation between 2010 and 2015.

Average water and sewerage bills currently stand at £319 a year for households in England and Wales. If Ofwat agrees to the companies’ proposals then this will rise to £355 by 2014.

Tough times

Mrs Finn said: ‘In these tough times, clearly it is important that bills are kept under control.

‘We are challenging these proposals and the water companies are on notice that they will have to justify every single penny of customers' money that they wish to spend.’

Mrs Finn’s comments came ahead of the publication today of Ofwat’s Service and Delivery Report. The report shows how the water companies performed in delivering services to customers over the last 12 months.

Leakage

According to the report, although companies are generally hitting their performance targets, there is still room for improvement. For example, while all companies achieved their target for leakage for the first time, the industry still leaked 3,291 megalitres of water a day – enough to fill the bowl of the new Wembley Stadium almost three times every day.

Commenting on the report, Mrs Finn said: ‘The water companies are getting better. Yet in terms of the progress what we are seeing is small steps up a steep hill. This is no time for complacency.

‘We want to ensure that customers receive consistent quality of supply at reasonable prices. We believe increasing competition will be the key to meeting these challenges.’

‘With an increasing population and the impact of climate change we need to think differently about how we manage our water.’

Protect consumers

John Holmes, principal economist at Which?, said: ‘Which? welcomes Ofwat’s efforts to keep a rein on water companies’ charges.

‘During these difficult times it is more important than ever that regulators do everything they can to protect consumers from high prices for essential services.’

Households looking to cut their bills should check Which?’s guide to using less water.

For daily consumer news, subscribe to the here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml. Find out more about RSS in the Which? guide to news feeds.