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FIVE water companies are begging the regulator to let them raise your bills

Water bills could be about to rise even further for millions of customers across England and Wales. Back in February, five water companies appealed to the Competition and Markets Authority (CMA) for permission to raise payment rates above the limits set by the water regulator, Ofwat. The CMA is likely to announce its decision later this week.

The five companies who submitted the request are Anglian Water, Northumbrian Water, Southern Water, Wessex Water and South East Water. Together, they supply 14.7 million people. They’re saying that they want to upgrade their crumbling infrastructure, which could cost around an extra £2bn. And of course, they want to pass those costs to the consumer.

Recent review of water bills

Ofwat usually sets the rates at which bills can increase for a 5-year period. Average annual bills are currently permitted to rise to £597 (before inflation) by 2030. That’s a 36% increase compared to the beginning of this year.

The regulator last published its five-year review in December 2024 – just 10 months ago. Each water company bids with an amount that they’d like to charge, and Ofwat responds with the rate they’re actually permitted to increase the prices by. The rates up to 2030 set last year were as follows:

  • Anglian’s average bill is going up from £491 to £631, or 29%. Ofwat rejected the company’s proposed £649.
  • Northumbrian Water is going from £422 to £510, up 21%. The company’s £524 proposal was rejected.
  • Southern Water had the biggest increase. Its  total shot up by 53% from £420 to £642 – up 53%. Ofwat rejected the company’s £768 proposal. 
  • Wessex Water will increase from £508 to £614, up 21%. It originally asked to hike prices to £658.

These increase rates are already meant to include the price of infrastructure upgrades. Ofwat’s website explains that:

Ofwat does not determine the level of environmental investment, which is set out by agencies such as the EA. Ofwat’s job is to scrutinise the cost of proposals in company business plans to make sure all investment is good value for money, and then to hold companies to account for that investment.

Ofwat sets an allowed return that provides a reasonable return for the risks that investors face for their investment. There are opportunities for investors to earn enhanced returns where companies deliver great levels of service to customers and the environment, and the incentive mechanisms ensure investor returns are lower than the allowed return where performance is poor.

CMA appeal

So, what’s the chance that the CMA will actually grant permission to the five water companies? The Guardian reported that:

Water industry insiders believe that the CMA is more likely to allow bill increases than to cut them, given the huge need for investment, although they cautioned that there are few clues to the regulator’s thinking.

S&P Global Ratings, an influential agency, said that the water companies were requesting as much as £2bn in extra spending, on top of £104bn already allowed over five years. However, the agency said there was too much uncertainty over the CMA’s position to try to forecast an outcome.

Water industry sources have speculated that the CMA may be leery of further bill increases because of the impending abolition of Ofwat for a new regulator, along with the Labour government’s promises to avoid hiking bills. Back in July, then-environment secretary Steve Reed said:

Our water industry is broken. That is why this Government will fix our broken regulatory system so the failures of the past never happen again.

The Government will abolish Ofwat. In the biggest overhaul of water regulation in a generation, we will bring water functions from four different regulators into one.

A single, powerful regulator responsible for the entire water sector will stand firmly on the side of customers, investors and the environment and prevent the abuses of the past.

 It will provide the clarity and direction required for a strong partnership between Government, the sector and investors to attract billions of pounds of new investment.

Why bother with a regulator, at this point?

Thames water also joined the other five companies in the submission of the original appeal. However, the supplier later dropped its request as the scale of its failings came into light and the threat of nationalisation loomed.

Instead, Thames Water’s creditors are now appealing to Ofwat for permission to ignore environmental safety regulations and to wipe out a chunk of debt, in return for a large cash injection for infrastructure improvements.

So, we have five companies trying to go over Ofwat’s head in a bid to charge even more, in exchange for infrastructure upgrades that were already meant to be their responsibility. Then, we have a sixth company – Thames Water – whose creditors are asking for debt forgiveness and permission to dump more sewage… in exchange for the infrastructure upgrades that were already the company’s responsibility.

We needed a regulator for water suppliers in the first place because customers don’t have a choice in their supplier. Water companies have a regional monopoly, so should the CMA grant the new permission, customers in these areas will have no choice but to pay more.

Now, the water companies are essentially holding our vital infrastructure for ransom – demanding ever more money in exchange for doing the very basics of their job. It’s time to admit, as a country, that the project to privatise vital utilities simply has not worked.

As Cat Hobbs, of nationalisation campaign group We Own It, said:

Here here. After that, we have a suggestion for five more water companies to nationalise, for a start. After all, and by their own admission, they simply don’t have the money for vital repairs without ripping off their customers.

Featured image via the Canary

By Alex/Rose Cocker

This post was originally published on Canary.