Water firms planning to raise bills, in resists regulator

Water companies are likely to seek bill increases to cover the cost of improving services, says the boss of Ofwat (Office of Water Services).

Water companies are expected to request higher bills starting from 2025 in order to cover the costs of enhancing services, according to David Black, the head of regulator Ofwat. This move comes after major suppliers faced severe criticism for their poor records on sewage spills and leaks, as well as their significant debts. Thames Water, in particular, is currently at risk of government takeover due to its financial situation. 

Despite defending the regulator's performance, Black acknowledged the need for "hard lessons" and expressed his frustration with excessive executive pay in the industry. While acknowledging the criticism, Black stated on BBC Radio 4's Today programme that customers should anticipate bill increases as companies strive to make improvements. 

Former environment secretary George Eustice indicated that bills were likely to rise by an average of £42 per household in 2025, although he dismissed claims of a 40% increase as unfounded. Water UK, the industry representative, emphasissd that any price hikes would be regulated. Surfers Against Sewage, a campaign group, criticised the idea of increased bills, arguing that consumers should not bear the consequences of water company mismanagement. 

Recently, Thames Water faced challenges in raising funds to service its substantial £14 billion debt. The company, responsible for supplying a quarter of the UK population, has been heavily criticised for sewage discharges and leaks, prompting calls for service improvements. Failure to secure the necessary funds may result in temporary re-nationalisation through a "special administration regime." Black, however, regarded this as a last resort and clarified that customers would not bear the burden if the company went bankrupt. 

Ofwat awaits Thames Water's financial recovery plans and stresses the need for substantial fundraising. Talks are ongoing to secure additional funding. While concerns have been raised about the potential impact on customers and taxpayers, Ofwat maintains that water companies are responsible for their financial structures, with the regulator focusing on safeguarding customers. 

Water companies throughout England and Wales must submit their business plans for 2025-2030 to Ofwat by October 2nd. The regulator will subsequently issue guidance on bill adjustments early next year. The industry body, Water UK, traditionally announces planned price increases annually, typically in February, according to Ofwat.

Ofwat - It is the economic regulator of the water and wastewater industry in England and Wales. OFWAT's primary role is to protect the interests of consumers by promoting competition, ensuring affordable prices, and encouraging sustainable water and wastewater services. It regulates water companies and sets price limits, monitors their performance, and promotes efficiency and investment in the industry. OFWAT also plays a crucial role in safeguarding the environment and promoting water resource management.