Water companies across England and Wales have submitted their plans to cut consumer bills. The plans were shared with Ofwat as part of their business plans for the years 2020-2025.
As part of Ofwat’s 2019 price review, all water companies must set out a detailed business plan outlining how they will meet the needs of their customers from 2020 to 2025 and beyond. Plans should cover a range of matters including: what companies propose to invest, what they propose to charge customers, how they will support vulnerable customers and how they will ensure the long-term resilience of their infrastructure and operations.
Ofwat will scrutinise all of the business plans before publishing an initial assessment of each company’s plan on 31 January 2019, where it will categorise companies’ plans according to the level of quality, ambition and innovation they have demonstrated. The best plans could benefit from incentives through the price review process, while those that fall short will face closer scrutiny and interventions and could receive lower returns.
Ofwat will make final decisions on the services water companies must deliver and limits on the prices they can charge customers in December 2019.
Ofwat Senior Director for Strategy & Planning, John Russell, 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.”
Severn Trent and United Utilities said they would cut the average bill by 5% and 10.5% respectively. Thames Water said bills would be unchanged whilst South West Water said it would offer customers a stake in the business.
Since privatisation in 1989, water bills have risen above inflation by about 40% and the regulator has faced criticism for overestimating the costs incurred by water companies, which have been taken into account by Ofwat during its price reviews.