Water watchdog gives
Ofwat seven out of 10 for water deal - but is concerned about impact
for some customers
The Consumer
Council for Water today (26 November 2009) has given Ofwat a mark
of seven out of 10 for its final decisions on water price limits
in England and Wales from 2010 to 2015.
While there is some good news for water customers as on average
bills will remain about the same, the watchdog is concerned that
Ofwat has eased off on water companies’ efficiency targets –
causing higher bills for some water customers.
Ofwat has announced that, before taking inflation into account,
average bills will remain broadly flat for most customers across
England and Wales, with the average annual water and sewerage bill
moving from £343 to £340 by 2015.
The prices announced vary from company to company, so depending
on where they live, customers will face a range of price changes
from a reduction in average annual bills by as much as seven per
cent, to an increase in bills of 13 per cent before inflation (see
table).
Water watchdog gives Ofwat seven out of 10 for water deal - but
is concerned about impact for some customers
http://www.ccwater.org.uk/upload/doc/1909_Final_Determinations_E_W.docCustomers
of companies such as Essex and Suffolk Water (13%), Bristol Water
(7%), Southern Water (5%) and Thames Water (3%) will all see rises
in average bills. South West Water customers without a meter could
see a 29 per cent rise in bills.
Today’s announcement suggests that Ofwat was arguably
unrealistic in its draft decisions back in July when it suggested
that average bills would fall by £14. At this point, eight out of
ten customers told the Consumer Council for Water that this deal
would be acceptable.
However, Ofwat had left out some important elements of
customers’ priorities such as reducing the risk of sewer flooding;
maintaining pipes, sewers and treatment works; securing safe,
reliable water for the future, and reducing leakage. The Consumer
Council for Water lobbied the regulator hard to include these
priorities – improvements which could have been made while still
allowing price reductions.
In its final decision, Ofwat has included many of these customer
priorities but it also has significantly eased the pressure on
water companies to be more efficient – meaning that some customers
will face higher bills than they are willing to pay.
Dame Yve Buckland, Chair of the Consumer Council for Water,
said: “The overall deal will be acceptable to many customers who
told us that they wanted bills to remain flat, and over England
and Wales, average bills are actually going down by one per cent.
However, we would give the deal a seven out of 10 because Ofwat
has eased off on the companies, meaning that some customers will
face higher bills.
“There is also a risk that bills may creep up over this five
years with further work to be done for the environment, and other
costs.
“We were surprised that Ofwat has allowed water companies to
come back for higher prices if customer debt increases. If water
companies fail to collect customer debt, they can ask for more
money from Ofwat, and pass that cost on to all of their customers.
“Even though prices are generally flat, there is still an issue
of affordability for many water customers. When we ask them ‘are
your water bills affordable?’ one in five customers tells us no.
We are concerned that this reduction in prices still isn’t
sufficient to solve the problem, so we will continue to press
government to provide better support for such households.
“This is the first time that the Consumer Council for Water – as
an independent body representing water customers - has been
involved in the price setting process. We negotiated with each
water company and Ofwat to make sure they took customers’ views
into account and this deal is still more than £50 a household
better than in 2004.”
Water companies can appeal to the Competition Commission if they
are not happy with Ofwat’s final decision and, if they do so, the
Consumer Council for Water will continue to strongly represent
water consumers throughout this process.
Ends
Notes for editors
1. Average water bills are an average of both metered and
unmetered customers. Price increases for individual customers may
vary, depending on how much water they use, if they have a water
meter, or if they do not have a water meter, the rateable value of
their home.
2. Research on Ofwat’s draft determinations can be seen at: http://www.ccwater.org.uk/upload/doc/Draft_Determination_Final_15_Oct_2009.doc
3. Today marks the fourth stage in a price setting process which
takes place every five years. The final stage is where companies
can challenge Ofwat’s decision by going to the Competition
Commission.
4. The Consumer Council for Water was set up in October 2005 to
represent consumers in England and Wales.
5. The Consumer Council for Water costs each water customer about
25p per year.
6. The Consumer Council for Water has gained £135 million from
water companies in reduced prices and extra investments.
7. The Consumer Council for Water has to date taken up 60,000
consumer complaints about water and sewerage companies, and
secured £6 million in compensation and rebates for customers.
8. The Consumer Council for Water is a non-departmental public
body reporting to the Department of Environment, Food and Rural
Affairs and the Welsh Assembly Government. It has a committee for
Wales, and four committees in England.
9. Our website is www.ccwater.org.uk.
For public enquiries to the Consumer Council for Water, contact
via our phone number, 0845 039 2837, email on enquiries@ccwater.org.uk,
or minicom on 0121 345 1044.
Contacts:
Amy Weiser
Phone: 0121 345 1006
Mobile: 07778 160808
amy.weiser@ccwater.org.uk