Water companies must cut bills
REGULATOR Ofwat will force water and sewerage companies to cut household bills by an average of £3, or nearly 1%, to £340 by 2015.
After taking inflation into account Ofwat said this will leave water rates “broadly flat” over the five years. The regulator also wants to see £22bn invested in maintaining and improving services.
In the North West United Utilities must cut prices from £374 next year to £364 in 2015, down £10 or 2.6%. The review contrasts sharply with United Utilities’ own business plan which was based on an increase of £28 on every bill by 2015.
The price review has been widely anticipated by the water industry and analysts who feared price restrictions would hamper the financial performance of utility companies. But the review has been kinder on the companies than draft proposals, published in July.
Then Ofwat was recommending average bills should fall by 4%, or £14. In United Utilities’ case bills were to fall by £17, or 5% by 2015.
UU is already considering job cuts and has started raising cash. It sold two investments in other companies for £130m earlier this month and yesterday said it was looking at other disposals in its non-regulated business. But despite concern over future income it maintained a 5% increase in its interim dividend to 11.17p when it unveiled half-year figures on Wednesday.
Ofwat’s chief executive Regina Finn said: “People can shop around for the best deal on many things, but not water. Our job is to do this for them. 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.
“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. At a fair price.”
Warrington-based United Utilities said it would consider Ofwat’s proposals carefully before responding. Water companies will have two months to consider Ofwat’s prices before either accepting them or challenging them through the Competition Commission.
