Customers face bill hikes, regulator Ofwat says (Image: Getty)
Household water bills in England and Wales will increase by an average £31 a year over the next five years, the regulator has announced.
All water firms are hiking their prices by between 21% and 53%, Ofwat has announced.
Charles Watson, chair and founder of River Action, said: “It is a travesty that customers are now being forced to pay higher water bills, especially when these increases are directly the result of years of under-investment by the water industry.
“Shareholders in the water companies must be laughing all the way to the bank. With customers now being forced to foot the bill to repair and upgrade the water industry’s crumbling infrastructure, the very people who have already benefited for years from huge dividend payments, will see the value of their assets increase in thanks to this customer funded investment.
“The real question remains staring us unanswered in the face: when will those who have profited so rapaciously from decades of operational neglect, causing horrendous environment damage in the process, finally be held accountable and made to pay up for their totally irresponsible custodianship of these essential public services?”
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Water companies will be able to increase bills by 36% above inflation over the next five years.
Some regional suppliers will be able to increase bills by far more – 53% for Southern Water at an extra £222 a year.
The rise will fund £104 billion worth of investment.
The proposed bill rises would begin to take effect from April next year.
Ofwat chief executive David Black said: “Today marks a significant moment. It provides water companies with an opportunity to regain customers’ trust by using this £104 billion upgrade to turn around their environmental record and improve services to customers.
“Water companies now need to rise to this challenge, customers will rightly expect them to show they can deliver significant improvement over time to justify the increase in bills.
“Alongside the step up in investment, we need to see a transformation in companies’ culture and performance. We will monitor and hold companies to account on their investment programmes and improvements.
“We recognise it is a difficult time for many, and we are acutely aware of the impact that bill increases will have for some customers. That is why it is vital that companies are stepping up their support for customers who struggle to pay.
“We have robustly examined all funding requests to make sure they provide value for money and deliver real improvements, while ensuring the sector can attract the levels of investment it needs to meet environmental requirements.
“This has seen us remove £8bn of unjustified costs compared with companies most recent requests. In addition, our approach to setting a rate of return has saved customers £2.8 billion.”
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Bills will be going up by £157 on average across the sector over the next five years.
In July, under Ofwat’s draft determination, it was £94.
Consumer groups have expressed concern that many households will not be able to afford a sharp rise in water bills, and urged water companies to provide more support.
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “These bill rises may be less than what water companies wanted but they are still more than what many people can afford. Customers will be hit particularly hard from April with a large chunk of these increases frontloaded into next year – on top of inflation.
“We know at least 2 in 5 households will find these increases difficult to afford but the support being offered by some water companies lacks ambition. People want to see more investment, but this must be coupled with a strong safety net for customers who will struggle to pay. The case for a single social tariff to end the current postcode lottery of support has never been more compelling.”
Industry body Water UK had estimated that water bills would be £110 or 25% higher today had they kept pace with inflation.
A spokeswoman said: “Water companies want to invest a record £108 billion to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers and seas. We await Ofwat’s decision tomorrow and hope they give us the green light so we can get on with it.
“However, we understand increasing bills is never welcome. To protect vulnerable customers, companies have proposed increasing the number of households receiving support with their bills to three million over the next five years.”