Water bills in the UK are likely to increase by more than the £94 previously proposed over the next five years due to higher costs and the need for additional investment, according to the regulator Ofwat. In July, Ofwat provisionally consented to raising bills by an average £19 per year between 2025 and 2030. Consequently, bills would increase by a total of £94 over the period, up by 21%. Ofwat is set to finalize its decision by the end of the year, and it is currently unclear by how much bills will rise.
The government is set to unveil plans later this week, which are anticipated to lead to the largest reform of the water industry since privatisation in the late 1980s to mitigate the impact of rising bills and conjure funds for significant investments necessary to address population growth, climate change, and an aging water infrastructure. While the entire sector is facing difficulties, the proposed increases by Ofwat in July ranged significantly across the market, with the highest agreed increase of 44% for Southern Water and the lowest increase of 6% for Affinity Water.
Thames Water, the UK’s biggest water company, had permission to raise bills by 23%, although it has since argued that it needs to increase bills by 59% to continue operating normally. Accordingly, Thames Water’s shareholders declined to contribute the promised funds into the organization earlier this year, arguing that making any profit at the proposed bill rates would be impossible.
One of the reasons for Ofwat to consider allowing greater bill increases is to reflect steeper financing costs, the BBC reports. A new independent commission chaired by a high-profile official will be announced on Wednesday to consult the government regarding the proper changes needed to the sector to improve performance and encourage new investments. The panel’s review will obtain feedback from a diverse range of interested parties such as environmental organizations, customers, engineers, and investors whose concerns are not always aligned.
There has been widespread dissatisfaction with the industry’s current state, with clients furious over spills and pollution, and investors claiming that allowed bill rates aren’t enough to attract the investments necessary to address these issues. A few businesses have even found themselves in what one official described as a “doom loop,” with the decreased funds leaving them even less money to address the issues that led to fines for sewage outflows and leaks. Despite the regulator Ofwat being expected to welcome the formation of the new commission, others believe that the fact that it is being established demonstrates widespread dissatisfaction with the industry’s regulation, stating that Ofwat has failed to strike a balance between keeping customer bills low and stimulating investors’ investments. The new committee is unlikely to produce a report before Ofwat finalizes its decision on how much bills can increase by 2030
Read the full article from The BBC here: Read More
