If granted, water companies’ latest expenditure requests for 2025-30 would push the average combined bill up by 40% before inflation, compared to 2024/25 prices.
That’s according to data published by Ofwat last week, summarising the impact of the industry’s August PR24 representations.
Water companies doubled down when they responded to Ofwat’s July Draft Determinations (DDs), filing representations for higher expenditure allowances than they requested in their March 2024 business plans. According to Ofwat data, the industry’s totex request as of August is £107.7bn: up £7bn on March proposals, and £19bn higher than Ofwat’s July view.
Ofwat reported around half of the additional amount is to pay for new statutory demands from the Environment Agency and Drinking Water Inspectorate; almost half is due to increased project scope; and the rest is net cost increases.
The regulator’s bill data took this into account to show the average bill increase mooted was £29 in March (a 33% rise), cut down by the DDs to £19 (21%), and now £35 (40%) under company representations. Other factors driving prices up in the August plans were higher proposed rates of return for investors, and changes to the time period over which investment is paid off, compared to the DDs.
The spread of potential price increases was great, from 21% at Northumbrian Water and 23% at South West Water at the bottom end, to 84% at Southern Water and 53% at Thames Water at the top end. But Ofwat highlighted different companies had adopted different approaches to allowed returns (some using the DD approach albeit disagreeing with it, others using a higher return), so direct comparisons between firms is muddied.
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