Ofwat turns to tariff trials to help customers afford bills

Seasonal and rising block tariffs are among the ideas Ofwat has called on companies to try out in a bid to help customers cope with the cost of living.

In a consultation open until 3 November, the regulator has asked the industry to get creative with tariffs and charges, to target help at those who need it most, as well as to address in-home leakage and drive water efficiency. Currently, customers' bills are set on a flat standard amount based on their type of property, or on flat rate based on their use as measured by a water meter.

Ofwat was not prescriptive, but suggested ideas to look at might include: seasonal charging to help lower water bills in the winter when energy costs are higher; reductions for homes with water butts and permeable driveways which can help to reduce risk of flooding and pollution; and premium rates for very high use, particularly at times when water is scarce.

The consultation pointed out: “We see charging innovation (now as well as for 2025 onwards) as an important dimension in supporting customer affordability.”

Ofwat added that it would update its charging rules from April 2023 to clarify the treatment of trials, as well as to highlight the importance of key charging principles, including fairness, affordability and the environment. It published a separate, statutory consultation to update the Charges Scheme Rules alongside its charging innovation document.