Water suppliers could be forced to change the way they price water but only a few suppliers agreed to industry regulator Ofwat’s changes
Ofwat wants to sever the link between water and inflation calling it ‘not flexible’, and would not allow water companies to respond to the growing needs on its resources.
However, with the pressure to raise £90 million to upgrade the current infrastructure, a pricing restructure seems inevitable and the predicted increase will add £33 a year until 2045 – particularly unwelcome for households already struggling with the costs of gas and electricity.
The watchdog may now be able to refer the remaining suppliers to the Competition Commission, paving the way for a tense exchange between regulator and companies concerned about the impact of any changes on investment.
In a statement, Water UK said: “The majority of companies have been unable to accept Ofwat’s proposals in their current form due to widespread concern within the industry about their potential impact on investor confidence.
“Companies have proposed to Ofwat licence changes to deliver what is needed for the 2014 price review, and are also willing to engage constructively with the regulator on possible changes for future price reviews beyond 2020.”
Water companies condemned the proposal as ‘not in the best interests of customers, investors and wider stakeholders’. However, a spokesman for Ofwat told the Daily Mail: ‘Our regulation since privatisation has helped deliver £108billion investment, and without our challenge bills would on average be £120 higher.
‘These proposals will help us to meet emerging challenges, while continuing to make sure customers get a fair deal. To do this, we will make sure we continue to safeguard what investors value, so bills can be kept down for customers.
‘We now need to look at companies’ concerns about our proposals, and consider our next steps.’
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