Householders denied steep cuts in water bills as watchdog sides with utility companies for £3 fall

By
Sean Poulter
Last updated at 7:57 PM on 26th November 2009

Households have been denied big cuts in their water bills after industry regulator Ofwat ordered providers to reduce prices by just £3 - rejecting original plans for a £14 reduction first proposed in July.Customers will now see a cut of just £3 to an average of £340 before inflation over the next five years, industry regulator Ofwat said today.Ofwat said its decision would see prices around £34 or 10 per cent lower than under the plans submitted to the regulator by water companies earlier this year.The regulator’s chief executive Regina Finn said: ‘Customers have told us that they want us to keep water and sewage charges flat  while maintaining a safe, reliable supply of water. That’s what we’ve delivered.

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Water bills from Southern Water. The industry regulator Ofwat has said households will see a £3 fall in average water bills to £340
‘There’s more to this than just low bills, it’s about what customers get for their money.  We’ve scrutinised every pound in the companies’ plans to make sure they deliver what customers want.’But the share prices of the major water companies rose this morning in a clear indication from the market that they had been dealt a victory by Ofwat.
Shares in Severn Trent rose 38p to £10.44 on the FTSE 100 while United Utilities climbed 11.5p to 495.6p.Ofwat’s decision to keep bills broadly flat comes as the regulator unveiled a record £22 billion programme of investment in the network - around £935 for every property in England and Wales.Of this the bulk of the money - £12.9 billion - will be pumped in to maintain and replace assets from pipes to water treatment works. There will also be £1.1 billion earmarked to help prevent sewer flooding.’We will now make sure the companies deliver on their promises. If they don’t we’ll take action to protect customers,’ Ms Finn added.Since Ofwat’s initial decision in July, water companies have had a chance to plead their own cases with the regulator for an easier settlement.

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A Thames Water engineer replacing water mains in London
The industry argues that it should be allowed to make a fair return to encourage the outside funds needed to spend on the network.If the usually safe sector is forced to cut dividend returns - or even raise cash through rights issues - investors could be scared away and improvements to the network threatened, water companies have warned.Thames Water said its plans were based on its customers’ top priorities following extensive consultation on their willingness to pay for work to maintain and improve services.Chief executive David Owens said: ‘We will be examining Ofwat’s final determination carefully over the coming weeks in order to fully understand its implications for our customers and our business.’Our operational performance is better than ever right now. We want to maintain this level of excellence for our customers. That’s why our proposed investment programme for the next five years is so important.’Under Ofwat’s price review process, we have two months to consider the final determination.’Mick Rix, national officer of the GMB union, warned of job losses and further ‘turmoil’ in the water industry. He said: ‘Even before Ofwat’s final determinations, some water companies had announced their intention to cut hundreds of jobs and outsource activities in order to protect their profits, and we now expect other water companies to try and follow suit.’As well as the inevitable impact on job security for our members working in the industry, these cuts could impact detrimentally upon consumers, threatening the security of water supply and quality of clean water and service levels.’Pamela Taylor, chief executive of Water UK which represents water companies, warned they could be forced to cut work such as fixing leaks if the funding proved inadequate.
Unions have warned that water companies will try to protect profits by cutting jobs
‘It is quite possible that companies will have to adjust or stop their leakage programmes. That is what they will be looking at.’They will need to look at a whole raft of things, not just that. The quality of drinking water, their legal obligations. They will need to make sure they can fulfil those legal obligations.’They have challenges ahead such as climate change, with increased drought and flooding, a growing population with more homes - in particular in water-stressed areas.’Companies will need to look at the detail and say: has Ofwat understood; have they allowed us what we need?’On top of that, they have got to think: can we actually attract the long-term sensible investors we need? Because if all the customers, all the time, paid their bills, it’s still not enough money.’

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Ofwat are there to see that the water companies stay in profit..
I had some dealings with them a few years ago when I was being charged incorrectly. It took 4 letters of explanation before they could understand the problem, how they understand business accounts is a mystery.. oh yes of course they were hoodwinked by Severn Trent and Thames Water and probably others !!
Quote….’ the share prices of the major water companies rose this morning in a clear indication from the market that they had been dealt a victory by Ofwat.’
- c.gee, stafford, 26/11/2009 17:37

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dont pay your water bills,they cannot cut you off its against the law,FIGHT BACK BRITAIN,and while you are at it dont pay your tv licence either,the bbc is just the governments mouth piece.FIGHT BACK BRITAIN.
- rick, southend england, 26/11/2009 15:01

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We must place the blame for this exactly where it should be placed - at the feet of those in Westminster - we must stop voting for these people who run [or should I say RUIN] OUR LIVES in this way.
The British National Party WILL - WILL!!! - Take back Ownership of ALL UTILLITIES - Water - Gas - Electricty. They will make sure that these VITAL parts of our infrastructure are run for the benifit of Society. Not for the benifit of BIG company’s and their political friends.
- Snuggles, Area 51. European Superstate., 26/11/2009 13:58

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As a couple of pensioners, my wife and I can remember, it was the Conservative government of Mrs. Thatcher who gave our water away to profiteers. Which was one privatisation too many!
We expect profiteers to make profits.
- David Prestbury, Macclesfield England, 26/11/2009 13:54

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why bother?
- End The LibLabCON, UK not EU, 26/11/2009 13:46

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“WOW” That is 60 Pence a year what ever will we do with all that wealth ALL of a sudden andf after inflation we would still own them
This is like the Rip off that they have in place NOW
The system that they use NOW is Antiquated
A good example is the following:-
If you live on your own wether single or widowed and in particular a Pensioner
you pay the SAME as a family of say 3 to 6 persons
This sort of Family use a Washing M/c at least once a day, where as a single person would only use it ONCE a week or even less and that is NOT counting
all the other saving in the accomodation with ONLY ONE person
That means that a LOT LOT less water is used BUT the cost is still the same as a Family
This is Robbery and has been going on for YEARS
What World are OFWAT living in IT IS NOT THE SAME ONE WE ARE IN
It is time that they came into the REAL WORLD and EARNED their salary
How thick can one be
- Alan Hammond, Egham Surrey, 26/11/2009 13:46

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