UK (Parliament Politics Magazine) – Five water firms urge the CMA to permit bigger bill hikes than Ofwat approved, leaving millions of English households facing higher costs.
As reported by the Guardian, households across England risk higher water charges as the Competition and Markets Authority prepares to rule on disputed company spending plans.
The competition regulator is reviewing appeals from five water firms seeking permission to raise household charges above the cap imposed by Ofwat.
If the CMA backs bill increases, Emma Reynolds, the newly appointed environment secretary and 10th in a decade, may face a political storm.
Which five water companies are seeking higher bills?
Five firms, including Anglian, Northumbrian, Southern, Wessex, and South East, serve a combined 14.7 million customers across England.
Britain’s largest water supplier, Thames Water, with 16 million customers, has put its appeal on hold while seeking to manage its debt and future stability.
How will the proposed extra spending affect household water charges?
In England and Wales, largely privatised water firms have their maximum charges set by Ofwat over five years.
The regulator warned that average household bills could rise to £597 by 2030, a 36% increase aimed at financing investment in the water system.
The six water firms argue they need extra funds to upgrade aging infrastructure, with any additional spending passed on to customers.
Water experts believe the CMA will favor bill increases over cuts due to pressing infrastructure demands, though the regulator’s approach remains uncertain.
According to S&P Global Ratings, the water companies are seeking up to £2bn in additional spending, on top of £104bn already approved over five years. The agency added that uncertainty over the CMA’s stance makes it too early to predict an outcome.
The CMA had planned to release provisional determinations by mid-September but has pushed the timeline to early October, with water firms warning of a possible further delay.
What did Martin Young say about potential increases in water company spending?
Martin Young, a former investment bank analyst and now head of Aquaicity consultancy, said the three firms, Southern, South East, and Wessex, may get increased spending approvals due to the gap with Ofwat’s December allocations.
He stated that Ofwat’s assumptions on the cost of equity lag behind those of Ofgem, potentially leading the CMA to approve higher spending.
Mr Young added,
“Given the challenges and the clear need to invest and my observations from Ofgem, I would not be surprised to see movement.”
What did Emma Reynolds say about water bills and investment plans?
At the Labour Party conference in Liverpool, Emma Reynolds said “no more ripping off the British people” while pledging investments that benefit jobs, consumers, and economic growth.
She has yet to clarify how she will balance controlling bills with boosting investment to prevent leaks and sewage overflows. Sources said Ms Reynolds delayed a scheduled meeting with water bosses last week.
What did the government say about rising water bills and infrastructure failures?
A government spokesperson stated,
“This government inherited full water system failure which has left our infrastructure crumbling and sewage spilling into our rivers.”
They added,
“This failure was not dealt with, and the public rightly feel frustration at seeing bills increase. We are fixing the system to prevent future price hikes.”
What did industry sources and Steve Reed say about future water bill hikes?
A water industry insider said the CMA could face political pressure to curb major price increases, amid plans for a new regulator to replace Ofwat.
Steve Reed, the former environment secretary and now housing minister, warned in July that families should “never again face the shocking bill hikes of last year.”
According to a source familiar with Thames Water, Ofwat’s spending allowance was too limited. The company may return to the CMA to seek higher bills if the government denies its request for leniency.
How much will energy bills rise for British households this autumn?
Energy bills are set to rise this autumn for millions of households, due to increasing government subsidy costs.
From October, Ofgem will increase the government’s energy bill cap, raising a typical dual-fuel household bill to £1,755, an increase of just over £35.
What did Labour say about energy bills and Nigel Farage’s green energy plans?
In response to the new price cap, Labour slammed past government policies on renewables and attacked Reform UK’s Nigel Farage’s proposals to abandon green energy.
A spokesperson stated,
“Energy bills soared under the Conservatives because they tied our country to the fossil fuel rollercoaster, and working people are still paying the price. From banning onshore wind to failing to deliver new nuclear, their reckless decisions left Britain exposed to wholesale gas prices that are still 75% higher than before Putin’s invasion of Ukraine.”
They added,
“That’s why Nigel Farage’s unpatriotic war on clean energy would be a total disaster for families, businesses and our economy. His destructive plans would push bills higher, kill nearly a million jobs and scrap billions of pounds of vital investment across the country that will strengthen our energy security.”
What did Gillian Cooper say about winter energy bills and government support?
Gillian Cooper of Citizens Advice said the charity expects to receive more calls this winter from people struggling to manage their gas bills and meter top-ups.
She said,
“The government has made welcome changes to expand the number of people who’ll receive support with their energy bills this winter, but it’s not enough to turn the tide.”
Ms Cooper added,
“It’s high time for decisions about the longer term. The government must set out plans for how it will support the households struggling the most over the coming years and also prioritise investing in energy upgrades for millions of homes to reduce costs and keep money in people’s pockets.”