The Consumer Council for Water (CCW) is warning over the potential impacts on customers of the Competition and Markets Authority provisional findings in the Ofwat PR19 appeals by four water companies.
The Consumer Council for Water (CCW) is warning over the potential impacts on customers of the Competition and Markets Authority provisional findings in the Ofwat PR19 appeals by four water companies.
The plans “could be a tipping point for some households”, according to the detailed 17 page response by the statutory consumer body which represents household and non-household water and sewerage consumers in England and Wales.
The water consumer watchdog described the CMA’s findings as “a significant change for customers” compared to the package of prices, investment and service commitments proposed in Ofwat’s Final Determinations in 2019.
The response says:
“While customers would approve the increased investment allowed for improvements to areas of service they value – such as leakage reduction and increasing resilience against future risks such as climate change – this comes in a package that proposes bill increases before inflation at a time when many customers will be under pressure financially.“
“We are concerned that the increase in the assumption of the cost of capital that drives these increases goes against recent regulatory precedent and runs the risk of being over generous to companies at the expense of customers.”
According to CCW, while the CMA took account of evidence of customers’ views in terms of the additional resilience investment allowed for in the Provisional Determinations, there is no evidence that the impact on customers was considered in terms of the overall increase in financing costs and prices.
Emma Clancy, Chief Executive of the Consumer Council for Water (CCW), said:
“It appears the voice of the customer has been drowned out by the noise these four water companies have been making. Customers don’t have the same right to appeal that companies enjoy if they’re unhappy with the regulator’s decisions so we’ll be urging the CMA to listen and think again.”
“The CMA’s plan to increase the rewards for shareholders in return for very little additional investment risks fuelling the perception among many customers that they don’t get a fair deal from their water company. We’ve seen in the past how over generosity towards water companies has been very damaging to consumers’ views of the sector. It could prove to be a tipping point for some households if they end paying more at a time when many customers are already reeling from the impact of Covid-19.”
“Increasing the return for shareholders would also set a dangerous precedent for future price reviews and could embolden more water companies to chance their arm with their business plans knowing that an appeal could open the door to more generous returns.”
Click here to read CCW’s response in full.
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