Water bills to rise by average 21% over next five years, regulator rules

Sky News
Updated ·4-min read

Water companies in England and Wales have been told they will not be allowed to impose the hikes to bills they have demanded, the industry regulator has said in an interim verdict on their business plans for the next five years.

Ofwat declared that it was minded to slash, by a third, the combined increases that the 16 companies had submitted.

It left the average bill, the watchdog said, set to rise by £19 a year or 21% over the period.

Ofwat chief executive David Black said: "Customers want to see radical change in the way water companies care for the environment.

Money latest:
Policy tweak could save you £295 on car insurance

"Our draft decisions on company plans approve a tripling of investment [to £88bn] to make sustained improvement to customer service and the environment at a fair price for customers.

A final ruling will be made in December.

All firms sought hefty increases to bills between 2025-30, with Southern Water leading the way with a proposed rise of almost 73%.

As Ofwat's report suggested, their wishes - including the 42% hike demanded by crisis-hit Thames Water - are unlikely to be met following final consultations on the plans at a time when the industry is under such heavy fire from many sides.

It said companies' business plans proposed increases averaging £144 over five years.

Thames Water's proposed increase of £191 by 2030 had been reduced to £99, Ofwat said, while Severn Trent's proposed increase of £144 had been cut to £93.

The industry has long been accused of prioritising bonuses and shareholder dividends over investment in key infrastructure, systems that widely date back to the Victorian era.

Sky News revealed on Wednesday that the new environment secretary Steve Reed had summoned bosses for an urgent meeting, when his plans for tougher regulation will be spelled out later on Thursday.

These "initial steps" include customer panels to hold company boards to account and significantly higher financial penalties for failures.

Ofwat said that both Thames and Southern were to face additional processes, with the country's biggest supplier set to come under a new oversight regime that could lead to an independent monitor being appointed and given full access to its financial information.

Thames Water covers 16 million customers and could yet have to be placed in a government-controlled special administration as investors in its parent company baulk over fresh investment demands due to Ofwat's resistance to the company's proposed bill increases.

Ofwat's report stated that firms would face a target of reducing storm overflow spills to an average of 16 per year each by 2029.

Such numbers will alarm the companies, given recent industry performance.

Environment Agency data showed discharges of untreated sewage in 2023 doubled from 1.8 million hours to a record 3.6 million.

The number of individual spills also soared by 54% to 464,000.

The data only covers the spills that were actually picked up and campaigners say the problem is far worse than has been acknowledged.

Read more:
Thames Water pins survival hopes on Ofwat's shoulders
Why water firms argue that higher bills are essential

Thames was judged by the regulator to have performed particularly poorly.

The company effectively held a gun to Ofwat's head this week when it warned it would run out of cash by next May and would need a good business plan outcome to attract the investors it needs.

It said in response on Thursday: "We believe our plan is ambitious, deliverable, financeable and investible.

"Ofwat's draft determination understandably challenges us on efficiency and delivery."

Its statement added: "We are in any case taking stock of our turnaround plan under our new leadership and reflecting on our progress to date.

"We will consider all of Ofwat's proposals as we go through this process."

Shares in listed water firms reacted positively.

United Utilities and Severn Trent opened up by around 2%.

Those of Pennon, the company behind South West Water, were more than 6% higher.

However Water UK, the industry body, was less cheerful.

A spokesman said of the interim determinations: "Today's announcement is the biggest ever cut in investment by Ofwat.

"If it doesn't put this right Ofwat will be repeating the mistakes of the past.

"As a direct result, more housing will be blocked, the recovery of our rivers will be slower and we will fail to deal with the water shortages we know are coming.

"Water companies proposed to invest £105bn because it is the minimum needed to meet the legitimate concerns we've heard from the public about our environment and our economy."

The Consumer Council for Water raised fears that the bill increases Ofwat was planning would overwhelm more households.

It estimated that two million properties were already unable to meet their commitments.

  • Up next
  • Up next
  • Up next
  • Up next

Latest stories

  • Biden Fires Parting Shot at Supreme Court: ‘Not Above Law’

    Joe Biden may have removed his name from the 2024 presidential campaign, but he is determined to leave Donald Trump something to remember him with.Biden is calling for sweeping reforms in the Supreme Court to ensure that no president is above the law. To preserve his legacy, he sees it as imperative to shackle Trump, whom he sees as a threat to democracy.The president wants to transform the Supreme Court to make it less rigid and more answerable—and while any lasting changes are unlikely to pass

  • Supreme Court Rocked by New Leak of Bitter Abortion Split

    The Supreme Court has been hit by a new damaging leak over its abortion decisions in a fresh blow to its embattled reputation—and a hint of even more leaks to come.Intimate details of months of disagreement among the nine justices were reported at length by CNN Monday, just hours after President Joe Biden and Vice President Kamala Harris both backed major reforms to the court, with the president accusing justices of being “above the law.” CNN also said its report was the first of a series, sugge

  • Bill Barr: Biden’s reforms would purge Supreme Court’s conservative justices

    Former Attorney General Bill Barr offered his concerns about President Biden’s reform proposals for the Supreme Court on Monday, arguing they would eliminate the high court’s conservative justices and “destroy the independence of the judiciary.” “Americans need to understand that the campaign to radically change the Court is coming. While current proposals like term limits…

  • I Retired a Millionaire 10 Years Early: Try These 6 Money Tricks To Help You Get Rich, Too

    According to a recent survey from CNBC, 53% of Americans feel they're lagging when it comes to retirement planning and savings. With the median balance of a retirement savings account at around...

  • McDonald's to 'rethink' prices after sales fall

    Sales at the fast food giant slip 1% as cost-conscious customers spend less.

  • Behind hoopla, Democrats anxious about Harris

    Behind the public jubilation over Vice President Harris’s swift rise to become their party’s likely nominee for president, Democratic lawmakers are privately anxious about her prospects of defeating former President Trump, acknowledging she is largely untested as a candidate and faces serious challenges. The anxiety, for the most part, has been set aside out of…

  • Meloni meets Xi as Italy vows to 'relaunch' ties with China

    Ms Meloni last year removed Italy from President Xi Jinping's signature Belt and Road Initiative.

  • India not rethinking issue of allowing Chinese investment, trade minister says

    NEW DELHI (Reuters) -India is not re-thinking the issue of allowing Chinese investments into the country, Trade Minister Piyush Goyal said on Tuesday. Earlier in July, India's Chief Economic Adviser V. Anantha Nageswaran said in the government's annual economic survey that New Delhi should focus on direct investments from China to boost its exports and help keep India's growing trade deficit with Beijing in check. "There is no rethinking at present to support Chinese investments in the country," the minister told reporters in New Delhi.

  • Apple picks Google chips, shuns Nvidia, to build AI products

    STORY: Apple unveiled plans for its artificial intelligence products back in June. Portions of the service, dubbed Apple Intelligence, are now rolling out to beta testers this week. But the system may be built on a surprise choice. A research paper from the tech giant published Monday seems to show that Apple has shunned chips from AI champion Nvidia. Instead it’s using processors designed by Google. That’s a surprise as Nvidia controls about 80% of the market for AI chips. The research paper doesn’t explicitly rule out using silicon from the firm. But its descriptions of software and hardware don’t appear to fit with any Nvidia products. Instead, Apple says it’s using so-called TPU chips, designed by Google for machine learning.The search titan sells access to such semiconductors via its cloud computing platform. There was no comment on the Reuters report from any of the firms involved.

  • Biden administration announces new $1.7 billion lethal aid package for Ukraine

    The Biden administration announced on Monday a new lethal aid package for Ukraine totaling about $1.7 billion and largely consisting of missiles and ammunition for missile, artillery and air defense systems the US has previously provided to Ukraine.

  • Toyota global output skids in June, dragged down by Japan and China

    Toyota's global production tumbled in June, down for a fifth straight month with the automaker hit hard by a certification scandal in its home market and a fierce price war in China. Output worldwide for Japan's biggest automaker slid 12.9% to 795,862 vehicles, the sharpest decline since December 2022. In its home market, output plunged 18.8% after the transport ministry found irregularities in applications by Toyota and other automakers to certify certain models in a widening of an auto safety scandal.

  • Biden decries 'extremism' on Supreme Court, details plan for term limits, ethics code for justices

    President Joe Biden said Monday that “extremism” on the U.S. Supreme Court is undermining public confidence in the institution and called on Congress to quickly establish term limits and an enforceable ethics code for the court's nine justices. Biden, who has less than six months left in his presidency, detailed the contours of his court proposal in an address at the LBJ Presidential Library in Austin, Texas, where he was marking the 60th anniversary of the Civil Rights Act. The likely Democratic nominee, Vice President Kamala Harris, who has sought to frame her race against Republican ex-President Donald Trump as “a choice between freedom and chaos," quickly endorsed the Biden proposal.

  • Text messages from law enforcement show concerns were raised more than 90 minutes before Trump rally shooting

    Text messages between law enforcement before the assassination attempt against Donald Trump earlier this month suggest that some officers raised the shooter’s presence at the rally more than 90 minutes before he climbed onto a roof and fired eight rounds at the former president.

  • Major phone companies could face lawsuits over sharing of stolen nude images

    Lawyers say a recent court decision in Washington state could help customers hold carriers such as AT&T and T-Mobile responsible for phone store employees who capture their private data

  • Oil prices settle lower as Israel-Hezbollah tensions offset by supply concerns

    Investing.com-- Oil prices settled lower Monday, as concerns of weakening global demand and stronger non-OPEC output weighed on sentiment offset rising geopolitical tensions.

  • Profits fall at McDonald's as it redoubles value push

    Fast food giant McDonald's vowed Monday to win back consumers with better value offerings after it reported a rare sales decline that the company partly attributed to an exodus of inflation-weary low-income consumers.The summer offering is a pitch to inflation-weary consumers to "help your dollar go further," said a June 20 company announcement.

  • Biden calls for supreme court changes and decries Trump immunity ruling

    President calls immunity principle ‘dangerous’ in Austin speech, and proposes code of conduct and term limits

  • Zebra Technologies beats expectations, raises full-year forecast on demand recovery

    The company is benefiting from a growth in ecommerce activity in the retail sector, its largest client, as inventory of its mobile computing clears and new orders see an uptick. Zebra Technologies reported quarterly revenue of $1.22 billion, beating estimates of $1.18 billion, according to LSEG data. The company has raised its 2024 forecast for sales growth to be between 4% and 7%, from the earlier expectation in the range between 1% and 5% growth compared with 2023.

  • Rachel Reeves pursues political prize over £22bn financial hole

    Carefully honed message of Commons speech is having to make tricky decisions because Tories left us a mess

  • Biden proposes sweeping Supreme Court reforms as he attacks ‘extreme’ judges

    Joe Biden has proposed sweeping reforms to the US Supreme Court accusing it of making “dangerous and extreme decisions” and losing the public’s trust.