Water regulator Ofwat under fire over high customer bills

MPs on the Public Accounts Committee says the industry regulator is failing to ensure savings are passed on

By John Ashmore

13 Jan 2016

Ineffective price regulation meant water companies made gains of over £1bn in the last five years from bills being higher than necessary, a group of MPs has claimed.

The Public Accounts Committee said consumers would be "appalled" that regulator Ofwat had not done more to ensure potential savings were passed on to customers.

The PAC says that between 2010 and 2015 water companies made windfall gains of approximately £1.2bn from higher bills, with the regulator making only "limited" attempts to make sure the extra cash was shared with billpayers.

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Their report, published this morning, claims Ofwat has consistently over-estimated the companies' costs when calculating price limits which affect customers' bills.

"Ofwat was set up to protect the interests of customers, most of whom have no choice over who supplies their water yet must pay bills typically running to hundreds of pounds," PAC chair Meg Hillier said.

“Many householders will therefore be appalled to learn these bills could have been smaller had Ofwat adopted a different approach to setting price limits for water companies.

“It must move swiftly to develop and present clear plans to achieve a better deal for customers, both now and in the years ahead," she added.

Responding to the committee's report, Ofwat chief executive Cathryn Ross said: "Holding companies to account and protecting customers is at the heart of what we do.

"That's why we've made sure bills will fall by 5% by 2020. We will carefully consider the thoughts of the PAC."

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