Water bills will rise by an average of £123 this year in the biggest hit to customer pockets since the industry was privatised 36 years ago, as the public pays to replace ageing infrastructure and cut record sewage pollution.
The price hike for millions of customers in England and Wales from 1 April will take the annual average bill from £480 to £603, and is higher than the £86 rise predicted by the regulator Ofwat in December, because water companies are adding inflation on top.
The increases raised concerns that households already facing a squeeze on their finances would face further hardship imposed by water companies, which have also been repeatedly criticised for their track records on sewage pollution and bumper executive pay.
Customers of Southern Water, the struggling utility company that covers parts of south-east England including Hampshire and Kent, face a 47% rise, to a record £703.
Households also face sizeable increases from South West Water, whose 1.8 million customers will pay an average of £686 this year, a rise of 32%; the troubled Thames Water, with an annual bill of £639, a 31% increase; and Yorkshire Water, where customers will pay an average of £602, a 29% increase.
Customers will receive higher bills until the end of the decade, to pay for what Ofwat and the industry say is an ambitious £104bn programme of investment.
Average water bills in England and Wales are forecast to rise 36% over the next five years, before inflation. Ofwat expects bills to rise sharply this year, with smaller increases over the following years.
Water UK, the industry body, said more than 3 million households would receive reduced bills and other financial support worth up to £4.1bn over the next five years.
But the Consumer Council for Water (CCW) said some companies had not invested enough in ensuring struggling customers could afford their water bills.
Mike Keil, the chief executive of the CCW, said: “These rises are the largest we’ve seen since privatisation and will heap considerable pressure on millions of customers who are already having to make difficult choices.
“Customers want to see investment in improving services and cleaning up our rivers but that can’t come at an unbearable cost to struggling households.”
Keil said 2.5 million households were already in debt to their water company and there was a danger that number would grow unless some companies showed more ambition around financial support. A single social tariff scheme was urgently needed, he said.
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David Henderson, the chief executive of Water UK, said: “We understand increasing bills is never welcome and, while we urgently need investment in our water and sewage infrastructure, we know that for many this increase will be difficult.”
The South West Water owner, Pennon, and United Utilities said on Wednesday they would increase dividend payments to investors, as they prepare to increase bills from April.
As part of the price review decision, Ofwat allows water shareholders to make an agreed return on their investment.
Ofwat has said it expects all water companies to have no serious pollution incidents and to significantly reduce raw sewage discharges from storm overflows.
Customers in the south-east of England will be paying record bills to companies in financial stress. Southern Water has debts of £6bn and has had its credit rating downgraded.
Thames Water is trying to avoid bankruptcy by seeking billions of pounds of new debt and equity. On Monday, the company will seek final approval for a plan for £3bn in emergency funds in the high court.
Article by:Source: Sandra Laville
