Price hikes loom as Ofwat agrees to reviews

Millions of households could be facing higher water bills than they expected after the water regulator Ofwat yesterday agreed to re-open price reviews into three water companies.

Millions of households could be facing higher water bills than they expected after the water regulator Ofwat yesterday agreed to re-open price reviews into three water companies.

Philip Fletcher, the new head of Ofwat, said that Anglian Water, Welsh Water and Tendring Hundred had requested reassessments claiming that their revenues and operating costs have been worse hit than expected when the price controls were set last November.

The main claim from the three companies is that the cost of providing free meters to customers is proving much higher than Ofwat initially assumed.

In addition, Anglian has said its costs for monitoring water quality are higher than expected while Welsh Water has told Ofwat that it is facing higher costs on waste treatment and ensuring water quality.

Welsh Water was ordered to cut bills by 10.5 per cent this year, while Anglian had to reduce them by 10 per cent and Tendring Hundred by 6.9 per cent.

An Ofwat spokesman said the re-opening of the price reviews had nothing to do with the recent ruling by the Competition Commission that Mid Kent Water and Sutton and East Sutton Water had been treated too harshly in the price review. The companies have been allowed to cut the size of the reduction in bills this year considerably.

Ofwat said that under the regulatory system it is required to review and possibly adjust price limits for companies if they can show there have been material changes to their costs in specified areas. Philip Fletcher, who took over as head of Ofwat in August, said he would look carefully at the three companies' applications and announce a new draft interim determination in mid-November and a final one before Christmas.