Millions of households in England face even bigger water bill increases than originally expected, as the Competition and Markets Authority (CMA) prepares to give a preliminary verdict on industry spending plans as soon as this week. Five water companies have appealed to the CMA for permission to raise bills higher than allowed by the industry regulator, Ofwat.
The five companies – Anglian, Northumbrian, Southern, Wessex and South East – together serve 14.7 million customers. Thames Water, Britain’s biggest water company with another 16 million customers, initially appealed but has paused the process amid negotiations to reduce its debt burden and secure its future.
Under England and Wales’s mostly privatised water system, Ofwat sets the amount water companies can charge customers over a five-year period. In December, Ofwat said average annual household bills could rise 36% to £597 by 2030 to help pay for investment. However, the six companies argued they should be allowed to spend more to pay for upgrades to creaking infrastructure, with any extra spending added to customer bills.
Water industry insiders believe the CMA is more likely to allow bill increases than to cut them, given the huge need for investment, although they cautioned there are few clues to the regulator’s thinking. S&P Global Ratings said the water companies were requesting as much as £2bn in extra spending, on top of £104bn already allowed over five years.
The CMA initially promised to publish provisional determinations by mid-September but has adjusted that to early October. Water companies had expected the announcement as soon as the coming week, although it could slip later. A water industry source suggested the CMA would be under political pressure to avoid major price increases, as the government plans for a new regulator to replace Ofwat.
