Ofwat waters down price cut proposals

26th Nov 2009 07:18

Water regulator Ofwat has ruled that water companies will have to lower bills over the next five years, though by less than it previously proposed. Ofwat said average annual bills will have to fall by £3 to £340 between 2010 and 2015.However, the price cuts proposed by Ofwat are less favourable than the £14 a year price cut to £330 suggested in July.Compared to what the companies asked for in the deliberations leading to Ofwat's final decision today, average bills will be £34 lower by 2015.The proposals envisage average bills for water staying flat at £162 and sewerage bills dropping by £3 to £178The water companies will have to invest a combined £22bn in water and sewage infrastructure during the five-year period.'Customers have told us that they want us to keep water and sewage charges flat while maintaining a safe, reliable supply of water,' said Ofwat chief executive Regina Finn. 'That's what we've delivered.'Among the listed companies, United Utilities will have to cut bills by £9 to £364, which is more generous to the firm than the £17 cut originally proposed. Severn Trent's bills are to fall by £13 to £292, compared to the £24 cut that was previously proposed. Northumbrian, which Ofwat had envisaged being allowed to lift bills by £3 over the period, will now be allowed to lift them by £17 to £331. United Utilities and Northumbrian have responded saying they will consider the detail of proposals before responding.Ahead of the decision, some companies were expected to complain to the Competition Commission if the proposals were not viewed as favourable. The companies have two months to decide whether to challenge the plans.