Annual water bills will go down by £50 on average and water companies will invest an extra £6m per day over the next five years to improve services and minimise their impact on the environment, under plans published by the water regulator.
Ofwat’s proposals affect 14 out of 17 companies in England and Wales. The bill reductions by 2024-25 will range from £7 for Hafren Dyfrdwy to £110 for Northumbrian Water compared with 2017-18 prices, before inflation.
Severn Trent, South West Water and United Utilities are excluded “in recognition of their [own] high-quality plans for the next five years”, Ofwat said on Thursday.
What the regulator called “the most far-reaching price review” it has ever undertaken requires water companies to cut supply interruptions by almost two-thirds; reduce leakages to save enough water equivalent to the needs of Manchester, Leeds, Leicester and Cardiff; help 1.5 million customers who are struggling to pay; and reduce incidents of pollution by more than a third.
The proposed investment will be in addition to funds needed to maintain water companies’ existing assets.
“These are seriously stretching goals for the sector, but we know they can be achieved,” said Rachel Fletcher, chief executive of Ofwat.
“We have seen three water companies leading the way and we now want the rest to show the ambition and drive to deliver this new era for customers and the environment.”
Water companies can now respond to Ofwat’s proposals. The regulator will finalise the plans in December, with the firms able to appeal to the Competition and Markets Authority until mid-February.
Ofwat’s instructions will then affect customers’ bills from April next year.