Court hears River Action case over customers ‘paying twice’

(by Karma Loveday)

River Action has started its legal challenge against Ofwat for allegedly allowing some customers to pay twice for infrastructure improvements.

At a hearing last week in Manchester Civil Justice Centre, River Action claimed Ofwat acted unlawfully when it implemented its policy that customers must not pay twice. The clean river campaigner said that in effect, some households would pay for infrastructure improvements to achieve environmental compliance, which should have been funded from historic bill payments.

The two specific grounds cited by law firm Leigh Day, which is representing River Action, were:

• Ofwat’s approach to implementing its own “not paying twice” policy was unlawful.

• Ofwat’s clawback mechanism to recover funds if water companies misuse customer money is flawed and incomplete.

Leigh Day partner Ricardo Gama said: “Our client believes that this case shows that Ofwat has failed to make sure that water bills are used for infrastructure upgrades. River Action will argue that the money that could and should have been used to make essential infrastructure improvements is now gone, and customers are being asked to foot the bill for those improvements a second time over.”

The legal challenge focuses on the PR24 determination for United Utilities and uses Lake Windermere as a case study. But a River Action statement said: “We believe the outcome has national significance. The case aims to expose systemic failures in how Ofwat oversees compliance across the entire water industry and how it routinely signs off funding that could allow water companies to use customers’ money to rectify their own past non-compliance.”

Ofwat has consistently and robustly defended its PR24 process. In an earlier statement on the case, a spokesperson said: “We reject River Action's claims. The PR24 process carefully scrutinised business plans to ensure that customers were getting fair value and investment was justified. We agree that customers should not pay twice for companies to regain compliance with environmental permits, and have included appropriate safeguards in our PR24 determinations to ensure this which we will monitor closely, taking action if required. We will respond to their claim in due course.”