Water companies vow to cut prices in England and Wales

Water companies in England and Wales have set out plans to cut or hold prices for millions of customers.

United Utilities, Severn Trent and Thames Water made pledges after a political and regulatory backlash against their performance this year.

United Utilities and Severn Trent said that they would cut customer bills by 10.5% and 5% respectively from 2020.

United Utilities said that this would amount to a saving of £45 a year per customer. They have also promised to invest £750m in producing a “major water resilience scheme” for customers throughout Manchester and the Pennines.

Severn Trent’s 5% reduction in bills would be aided by new pipelines which will achieve 13% efficiency in spending. They also plan to spend £6.6bn in improvements between 2020 and 2025.

Thames Water said that they would hold bills at the same rate but plan to return £20m to shareholders compared to £100m it returned in the previous year.


Ofwat’s pricing review

Industry watchdog Ofwat has asked water companies to outline a business plan, detailing how they intend to charge customers between 2020 and 2025, as part of their 2019 price review.

Michael Gove, environment minister warned water companies over their “concerning” behaviour back in February. He urged them to do more to tackle leakage which rose 2% to 3.183 billion litres per day in 2017-18.

Thames Water said recently that it plans to invest £11.7bn in upgrades by 2025, including £2.1bn to “boost resilience and reduce leakage”. They say they want to cut leaks by 15% and reduce pollution incidents by 18%.

This comes after Ofwat ordered Thames Water to pay back £65m to customers as part of a £120m package of penalties.

Ofwat also reprimanded Thames Water, Severn Trent, South East Water and Southern Water for their inadequate responses during the cold weather spell, the “Beast from the East” in February and March.

John Russell, a senior director at Ofwat said: “We’ve reached a key milestone in our price review process. From now until January 2019, we’ll pore over each and every business plan and we’ll be looking for evidence that they are robust, ambitious and, crucially, that they have been shaped by customers.

“All companies have had an opportunity to develop high-quality plans but where plans aren’t sufficiently ambitious or stretching, we’ll step in to protect customers and the environment.”

Tony Smith, chief executive of the Consumer Council for Water said: “This price review could define the future of the water industry in England and Wales. It represents a key opportunity for water companies to restore consumer trust by proving to their customers that they’re taking positive and decisive action.”