Ofwat review reveals connection costs up 21% since 2010 with some doubled

An updated review of benchmark water company costs for new supply connections has revealed they have increased by more than a fifth since 2010 and almost doubled in some instances.

Ofwat commissioned in 2016 a report into the connection costs incurred by monopoly water companies when providing new water supply connections.

Comparing the costs in the 2016 report with the study by Hyder Consulting in 2010 the regulator found the average costs to water firms had increased 21% Ofwat said the new figures will be used in its deliberations over complaints referred to it following the latest report.

Costs in any dispute referred prior to the 27 February 2017 report date will be benchmarked agains the Hyder report figures. Ofwat said it commissioned the new report on “recognising that the Hyder report is no longer reflective of current costs." In considering disputes Ofwat uses also a five-years old separate report on administrations costs related to new connections.

The regulator said the new benchmark costs were “on average 21% higher than the costs included in the Hyder report” but the variation was considerable. It looked at costs for connections made under verges, footways and carriageways at three different service lengths.

For a 4m length the costs for a verge connection had increased 31% compared to the 2010 figure while a footway connection had hiked 90% and a carriage way connection costs were up 74%.

The regulator has published only a summary of the new review report “on the grounds that the report contains commercially sensitive information about water companies' costs.”