Watchdog steps in to slash bills for Northumbrian Water customers

Ofwat have told Northumbrian Water they must reduce bills by 2% below inflation.

Nick Ansell/PA Wire
File photo dated 31/01/12 of a generic view of hands being washed under water running from a domestic water tap as two water companies serving millions of customers will hold down bills by more than previously expected over a five-year period under plans provisionally approved by regulators. PRESS ASSOCIATION Photo. Issue date: Friday May 30, 2014. Dwr Cymru Welsh Water will limit bill changes to 5% below inflation over the 2015/20 period, representing a real-terms cut, while investing more than ¿2.5 billion, under revised plans submitted earlier this month. It previously planned a 4.8% cut. Northumbrian Water has pledged a real-terms cut of 2% for the period, with investment of ¿2.7 billion. It previously planned to leave bills flat in real terms. See PA story CITY Water. Photo credit should read: Nick Ansell/PA Wire

Watchdogs have intervened in a bid to force a North East water giant to slash bills for millions of customers by up to 2%.

Northumbrian Water submitted plans in December in which they proposed to raise bills only in line with inflation, telling customers it would be a freeze in real-terms.

But regulators Ofwat have now told them to think again and said they must cut bills by 2% below inflation over the next five years.

In what is as a rare success for regulators, the company could be forced to reduce bills for the first time. In the last price review in 2009, bills rose by 1.7%.

Northumbrian Water - which supplies water to more than 2.7 million people across the region - will now enter a five-week consultation period with watchdogs to negotiate the final figure.

Ofwat chief executive Cathryn Ross said: “We recognise that public trust and confidence is essential if water and sewerage companies are going to remain legitimate in the eyes of their customers.

“These draft determinations will help maintain and build that trust and confidence. Under this price review we have seen companies rising to the challenge and developing innovative and efficient solutions for their customers both now and in the future, and for the environment.”

An average water bill for customers in the North East currently stands at £363.71. The watchdog intervention will be seen as a welcome move for millions of customers already hard-pressed by rocketing energy bills.

As part of the latest proposals the company plans to stage a revamp of the sewer network to reduce flooding and pollution. It’s hoped the multimillion pound investment will “minimise interruptions to supply”.

Heidi Mottram, chief executive of Northumbrian Water
Heidi Mottram, chief executive of Northumbrian Water

Heidi Mottram, Northumbrian Water’s chief executive officer, said: “While we appreciate that any increases in the household budget are unwelcome our plan avoids any change in bills apart from an adjustment below inflation.

“We have listened to our customers and produced a plan which balances the needs of our current customers, our future customers and is sustainable in the long term in protecting the environment.

“Northumbrian Water is one of the best performing companies in the industry - with bills that are already amongst the lowest in the country - and our sustainable five-year business plan will ensure that our bills will continue to be amongst the lowest in the country until 2020.”

Ofwat also revealed Dwr Cymru Welsh Water will limit bill changes to 5% below inflation over the 2015/20 period, representing a real-terms cut. The company previously planned a 4.8% cut.

The outcome will be seen as a victory for the regulator, which has been pushing for companies to accept lower rates of return to ease the pressure of rising bills on hard-pressed households, and will put pressure on rivals.

A spokesman said: “We will intervene where we think customers need to be protected.”

Ofwat’s draft determination said: “Both companies will reduce bills relative to inflation, deliver better services and meet their statutory obligations.”

The decision means three of the 10 large firms that provide both water supply and sewerage services have now accepted they must hold down charges by more than they had proposed in December. South West Water had its plans fast-tracked last month after agreeing to a 7% real-terms price cut.

Regulators have to act says pensioner

Lewis Arnold Sean Fahey, secretary of The North East Pensioners' Association (NEPA)
Sean Fahey, secretary of The North East Pensioners' Association (NEPA)

Pensioner Sean Fahey last night called on regulators from other sectors to follow Ofwat’s suit.

The 64-year-old, who is secretary for the North East Pensioners’ Association, said independent watchdogs had failed to act over recent years to stop soaring energy bills.

Mr Fahey, from Blyth, Northumberland, said: “Any reductions in the charges for hard-pressed pensioners at this time of austerity should be welcomed.

“It probably won’t make a massive amount of difference but if we could see this more often with regulators it would what people want.

“Over the years there has been an absence of regulators or a failure to act where people felt they were being ripped off.”

Mr Fahey said thousands of pensioners across the region living on a basic state pension of £112 were struggling to cope with rising bills.

The father-of-four, who retired eight years ago from the HMRC in Longbenton, North Tyneside, said: “I pay a £45-a-month bill but if you’re a pensioner on a state pension of £112 it can be very difficult.

“If you have a cold winter then you pay more for your bills and for these groups it gets critical.”


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