Water chiefs fear tougher price cap

WATER COMPANY chiefs are growing increasingly concerned that the industry regulator will impose an even tougher price cap on them than expected, reducing their profits by a further pounds 250m a year.

They fear that when Ian Byatt of Ofwat (pictured) publishes his final price controls this summer, he will limit the water industry's return on capital to as little as 4 per cent. This would reduce the average household bill by a further pounds 8.50 on top of the pounds 40 cut Mr Byatt already envisages. But it would cost the industry between pounds 200m and pounds 250m in reduced revenues.