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Ofwat makes submission to CMA following company appeals

Ofwat has referred the price redetermination requests from Bristol, Yorkshire, Northumbrian and Anglian Water to the Competition and Markets Authority (CMA). 

The price review sets the outcomes water companies should deliver for customers and the environment, and the price that customers will pay over the next five years. 

In a statement the water regulator said: “Since 2015, Ofwat has been clear and consistent in saying, in this price review companies needed to increase efficiency and improve performance to deliver more for customers. This is particularly important to address the challenges for the future – such as climate change and population growth – and the shortcomings of the past – such as operational failures and concerns that, in some cases, more attention has been paid to taking money out for shareholders than delivering for customers. 

Chief executive Rachel Fletcher said: “Our aim is to get the best outcome for customers and the environment, and a fair return for investors, both now and the long term. After extensive and detailed analysis in the price review, four companies have refused to accept our view on what customers should pay and the standards they should expect over the next five years. And so we welcome the opportunity for the CMA, with its independent expertise, to settle the matter once and for all.   

“As this review carries on, we will press ahead with our work to transform the sector: in its performance, its preparedness for facing future challenges like climate change and population growth, and its work to rebuild trust by showing the value it can create for society and the environment.” 

Ofwat has said that Improved service and investment for the future can be delivered while reducing customers’ bills because it is pushing for greater efficiency in companies and passing through lower financing costs.   

Anglian Water, Bristol Water, Northumbrian Water and Yorkshire Water have challenged Ofwat’s approach and want customers to pay more or receive a lower standard of service. Ofwat will set out how its detailed analysis of operational best practice, companies’ historic performance and business plans, and evidence of returns in capital markets shows this is unjustified. 

Author: Alec Peachey,
Topic: Policy & Regulation
Tags: water companies , ofwat , price review , environment , competition and markets authority


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