Water bills in England and Wales could fall by £15 to £25 a year from 2020, according to the water regulator.
The potential household saving comes as a result of new price limits for 2020 to 2025, suggested by Ofwat.
Water companies will now have to submit their business plans to the regulator, taking on board its recommendations, with final plans determined by December 2019.
Ofwat has also challenged water companies to:
- Go the extra mile in terms of the services they provide.
- Devise and deliver plans to identify and help vulnerable customers.
- Make long-term plans to address the pressures of a growing population and climate change – starting with addressing leakage.
Cathryn Ross, Ofwat chief executive, says: “Today, we unveil our blueprint for how we will push water companies to deliver more for customers through to 2025. The next decade will see profound changes in customers’ expectations and we are pushing the water sector to be at the very forefront of that.
“The methodology we’ve published today outlines how we will use our price review to get the very best for customers, through higher quality of service and support for those who need it most, all with scope for lower bills. We’ve said many times already that this will be a tough price review for companies. We will cut the financing costs they can recover from customers and, with this lower guaranteed return, they will need to more efficient and innovative than ever before. I’ve no doubt that the sector can step up and meet the challenges we’ve laid before them today.”
‘Ofwat has been overgenerous to water companies in the past’
On the price cap, Tony Smith, chief executive of the Consumer Council for Water – which represents water consumers - comments: “This is positive news for customers. Ofwat has been over-generous to water companies in the past at the expense of customers – a point we have repeated publicly many times and has been echoed by the National Audit Office and the Public Accounts Committee. This lower cost of financing is an important step in keeping future water bills as low as possible.
“However, we are concerned that the regulator has decided to remove the cap on the financial rewards companies can receive for meeting their performance targets. This could hand companies an opportunity to claw back some of the money they would be unable to get through lower financing costs and it could lead to bill increases, which many customers view as rewards for doing the day job.”
In Scotland, water bills are dependent on your council tax band, while households in Northern Ireland don’t pay for water bills as the cost is covered by the government.
See our Energy and water section for more of the latest news and advice.