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Water bills: Ofwat sets out price restrictions | Water bills: Ofwat sets out price restrictions |
(2 days later) | |
Household water bills in England and Wales will fall by an average of 5% - not including inflation - by 2020, the regulator Ofwat has ruled. | Household water bills in England and Wales will fall by an average of 5% - not including inflation - by 2020, the regulator Ofwat has ruled. |
This would see average bills fall in real terms by about £20 from £396 to £376. | This would see average bills fall in real terms by about £20 from £396 to £376. |
However, consumers will still pay more, as the companies are allowed to add on inflation, as measured by RPI. | However, consumers will still pay more, as the companies are allowed to add on inflation, as measured by RPI. |
RPI is typically higher than CPI inflation, and is currently running at 2.3% a year. | RPI is typically higher than CPI inflation, and is currently running at 2.3% a year. |
Nevertheless the Consumer Council for Water (CCW) said it was good news for consumers. | Nevertheless the Consumer Council for Water (CCW) said it was good news for consumers. |
"Most water companies and the regulator have listened to customers and delivered a deal which reflects the services they want, at a price most find acceptable," said Tony Smith, the chief executive of the CCW. | |
Customers 'get more' | Customers 'get more' |
After two years of deliberations, Ofwat has now determined the levels at which all 18 water and sewerage companies can set their prices for the five-year period beginning in April 2015. | After two years of deliberations, Ofwat has now determined the levels at which all 18 water and sewerage companies can set their prices for the five-year period beginning in April 2015. |
Thames has been told it will have to cut charges by 5% in real terms, United Utilities must cut by 3%, and Bristol Water - a water-only company - must cut charges by 21%. | Thames has been told it will have to cut charges by 5% in real terms, United Utilities must cut by 3%, and Bristol Water - a water-only company - must cut charges by 21%. |
Ofwat said the ruling will allow water companies to invest £44bn over the next five years, or £2,000 per household. | Ofwat said the ruling will allow water companies to invest £44bn over the next five years, or £2,000 per household. |
"With bills held down by 5% and service driven up over the next five years, customers will get more and pay less," said Cathryn Ross, Ofwat chief executive. | "With bills held down by 5% and service driven up over the next five years, customers will get more and pay less," said Cathryn Ross, Ofwat chief executive. |
For water and sewage charges, Anglian customers will see the greatest percentage drop in yearly bills, down 10% to an average of £390 by 2019-20. | For water and sewage charges, Anglian customers will see the greatest percentage drop in yearly bills, down 10% to an average of £390 by 2019-20. |
Northumbrian customers will see the smallest change in their bills, dropping 1% to £382. | Northumbrian customers will see the smallest change in their bills, dropping 1% to £382. |
The main factor behind Ofwat ordering a drop in bills has been the sustained period in low interest rates. | The main factor behind Ofwat ordering a drop in bills has been the sustained period in low interest rates. |
This has allowed water companies to borrow much more cheaply for infrastructure projects, which are among their main costs. | This has allowed water companies to borrow much more cheaply for infrastructure projects, which are among their main costs. |
Companies have two months to accept Ofwat's decision, or seek a referral to the Competition and Markets Authority. | Companies have two months to accept Ofwat's decision, or seek a referral to the Competition and Markets Authority. |
Both Thames Water and United Utilities said they would look at the ruling carefully before coming to a decision. | Both Thames Water and United Utilities said they would look at the ruling carefully before coming to a decision. |