Water bills will rise by 4.6% next year – pushing bills up by £16 to an average of £356 for the year beginning 1 April 2011.
The increase is broadly in line with inflation, but will hit consumers hard because it is based on the RPI (Retail Price Index) measure of inflation for November 2010, which was higher than CPI (Consumer Price Index) inflation. CPI does not include mortgage interest, whereas RPI does.
Which? utilities expert Sylvia Baron says: ‘Unfortunately, consumers’ bills will be higher across the board with this increase following the recent rise in gas and electricity prices.
‘There’s no option for consumers to switch water suppliers if they are not happy with the price they are paying, but metered customers can minimise the impact on their bills by checking out our tips on using less water.’
Prices set by Ofwat
Water industry regulator Ofwat – which is responsible for setting prices – defended the decision to base prices on RPI. A spokesman said: ‘We’ve used RPI since privatisation in 1989, and all the other regulators use RPI too.’
‘Sometimes it works in the customer’s favour, as the RPI rate used last year was 0.3% when CPI was 1.9%.’
Prices are set by Ofwat every five years. In 2009, the regulator set prices for 2010-2015 at inflation minus 0.1%.
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