Bill cuts headlined the draft determinations for companies fast tracked through the PR19 process, when Ofwat published them this morning.
South West Water customers stand to save the most by 2025, with the average bill falling by £77. United Utilities customers will save £49 and Severn Trent customers £16 (see table). In addition, the companies will substantially expand their financial support schemes for those who find it hard to pay, including through social tariffs.
Consumer Council for Water chief executive Tony Smith said, though: “Our research suggests Ofwat could still go slightly further in reducing bills, without eating into the essential investment Source; Ofwat
that every company in England and Wales has promised. Companies should also make clear what impact inflation and the regulatory rewards that customers pay for will have on their bills.”
Ofwat emphasised the price cuts had not come at the expense of investment. Senior director David Black said: “Our draft decisions for these companies show that investment in service and infrastructure can go hand in hand with more affordable bills.” The regulator explained: “By reducing the cost of capital and creating opportunities for companies to improve efficiency, we have opened the way for lower bills.”
Among the fast track draft determination highlights were:
Stretching customer service commitments
All three plans demonstrate innovation. Ofwat highlighted a very recent development, that ST and UU are contributing members of the new World Water Innovation Fund alongside organisations from Australia, Brazil and the USA. The fund aims to develop innovative techniques and carry out new research and large-scale trials of new technologies. It will share and publish its findings, allowing customers all around the world to benefit.
Back in balance
“Each fast track company has taken steps that demonstrate its commitment to meet our expectations on performance-related executive pay.” ST committed to weight 51% of the annual incentive to customer, environment and health and safety delivery. SWW committed that 70% of the annual incentive will be based on customer delivery and UU said at least 60% of the annual incentive will be linked to customer delivery. All three committed to align the long term incentive to customer delivery.
UU will spend £71m of its own money on financial assistance schemes over 2020-25 and match any shareholder distributions
with contributions to its community fund, if they are more than 2% above its base dividend.
The companies have until 24 May 2019 to make representations.