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Ofwat calls for lower water bills Ofwat calls for lower water bills
(about 1 hour later)
Proposals set out by water regulator Ofwat will see average household water bills fall between 2010 and 2015. Water companies must cut the average household bill between 2010 and 2015 despite their appeals to raise prices, regulator Ofwat has proposed.
Taking out the impact of inflation, the proposals, if accepted, would see the average water bill fall by £14 to £330. Taking out the impact of inflation, the regulator wants the typical bill in England and Wales cut by £14 to £330.
According to the regulator, the proposals will allow water companies to invest £21bn in improving services over the next five years.According to the regulator, the proposals will allow water companies to invest £21bn in improving services over the next five years.
Every five years, Ofwat sets limits on the prices that water and sewerage companies in the UK can charge. But companies suggest that customers might suffer as a result of the plans.
Every five years, Ofwat sets limits on prices that water companies in England and Wales can charge.
Water and sewerage services in Scotland and Northern Ireland are regulated separately.
'Value for money''Value for money'
Water companies submitted their business plans to Ofwat in April, and the regulator has now set price limits as well as suggested investment levels for each individual water supplier.Water companies submitted their business plans to Ofwat in April, and the regulator has now set price limits as well as suggested investment levels for each individual water supplier.
People can shop around for the best deal on many things, but not water Regina Finn, chief executive, OfwatPeople can shop around for the best deal on many things, but not water Regina Finn, chief executive, Ofwat
There will now be a consultation period until a final decision from the regulator in November.There will now be a consultation period until a final decision from the regulator in November.
The water companies have an opportunity to renegotiate in September and they can also appeal to the Competition Commission.The water companies have an opportunity to renegotiate in September and they can also appeal to the Competition Commission.
The new bills will then come into effect in April 2010.The new bills will then come into effect in April 2010.
"People can shop around for the best deal on many things, but not water. That's why we've challenged the companies' plans rigorously to ensure that customers get the best value for money," said Ofwat chief executive Regina Finn."People can shop around for the best deal on many things, but not water. That's why we've challenged the companies' plans rigorously to ensure that customers get the best value for money," said Ofwat chief executive Regina Finn.
"We understand times are hard and we have listened to what customers have told us. They want safe, reliable water supply at a reasonable cost," she added."We understand times are hard and we have listened to what customers have told us. They want safe, reliable water supply at a reasonable cost," she added.
Ofwat's proposals would see the average bill fall to £330 compared with a rise to £375 that the water companies had proposed in their business plans. 'Worries'
The highest proposed bill was £517 from South West; the lowest was £318 from Severn Trent. Ofwat's proposals would see the average bill fall to £330, as against a rise to £375 that the water companies had proposed in their business plans. Ofwat last ruled on a cut in average household bills in 1999.
Last time Ofwat set limits in 2004, the water companies asked for an average price increase of 29%, or £72 before inflation over five years. The regulator allowed them to raise prices by an average of 18%, or £46 before inflation. But companies said that if these latest plans were confirmed, they could affect customers.
"Initial indications suggest the draft determination may not allow us to deliver what our customers want in the future. For example, this means we will not be able to reduce leakage at all over the next five years," said David Owens, chief executive for Thames Water - the UK's largest water company.
And Pamela Taylor, chief executive of Water UK - which represents the water suppliers - told the BBC: "It could be that some things such as increased metering programmes may be at threat. Companies will have to look at that in the round and see, can they still deliver."
She said that Ofwat demanded that the water companies met a number of obligations, such as protecting rivers and bathing waters, and that needed investment.
Last time Ofwat set limits in 2004, the water companies asked for an average price increase of 29%, or £72 before inflation, over five years.
The regulator initially suggested it would allow then a rise of 13%, or £33, but ultimately allowed them to raise prices by an average of 18%, or £46 before inflation, and was criticised by some consumer groups for its leniency.