Five water firms are to be provisionally allowed to raise their bills by between 1% and 5% more than previously granted by regulator Ofwat, the competition watchdog has said.
Five companies – Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water – argued that Ofwat’s original decision left them unable to meet the regulatory requirements set out for them.
An independent group of experts appointed by the Competition and Markets Authority (CMA) said Anglian and Northumbrian should be allowed to increase their bills by a further 1%, Southern by 3%, South East by 4% and Wessex by 5%.
The CMA said a provisional decision allowed for 21%, or an additional £556 million in revenue, of the total £2.7 billion the five firms requested.
Kirstin Baker, who chaired the independent group of experts appointed by the CMA to consider the price controls, said: “We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.
“We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost.”
The CMA said the extra money would fund more resilient supply, reduce pollution and reflect increased financing costs.
In December, Ofwat said it would allow water firms to raise bills by an average of £157, or 36%, over the next five years to help finance investment into crumbling infrastructure.
But in March, Ofwat formally referred requests from the five companies for a redetermination of their bill increase allowance after they argued that the decision left them unable to meet the regulatory requirements set out for them.
This started a six-month period for the CMA to consider their appeals.
Water minister Emma Hardy said: “I understand the public’s anger over bill rises – that’s why I expect every water company to offer proper support to anyone struggling to pay.
“We’ve made sure that investment cash goes into infrastructure upgrades, not bonuses, and we’re creating a tough new regulator to clean up our waterways and restore trust in the system.
“We are laser-focused on helping ease the cost of living pressure on households: we’ve frozen fuel duty, raised the minimum wage and pensions and brought down mortgage rates — putting more money in people’s pockets.”
