CMA Redetermines UK Water Price Controls, Cutting Company Requests by 80%
An independent panel of experts from the Competition and Markets Authority (CMA) has issued its provisional redeterminations on water price controls for five major UK water companies that challenged the original rulings made by the regulator, Ofwat.
The CMA’s review has led to a significant reduction — around 80% — in the extra price hikes initially sought by these companies.
The five companies involved — Anglian Water, Northumbrian Water, South East Water, Southern Water, and Wessex Water — collectively supply services to over seven million customers and generate nearly £4 billion in annual revenue. They had originally requested an additional £2.7 billion in funding from customers to support various infrastructure and compliance projects, claiming that Ofwat’s initial determinations left them unable to meet regulatory requirements.
Following CMA’s review, the approved amount has been cut down to £556 million, which accounts for only 21% of the requested sum. This adjustment translates to an average 3% increase in household water bills, on top of the 24% rise already planned under Ofwat’s original pricing decision.
Key Highlights of CMA’s Provisional Decision
Most requests for new or expanded projects beyond Ofwat’s prior approvals have been rejected.
The decision allows for an average 3% additional increase in customer bills, resulting in a total rise of about 27% compared to current charges.
The extra funding aims to enhance supply resilience, reduce pollution, and ensure companies meet legal standards for drinking water quality.
Investor returns were slightly revised to account for higher financing costs caused by increasing interest rates, ensuring future investment stability.
Focus on Customer Protection
While the water companies argued that Ofwat’s original pricing left them underfunded, the CMA emphasized that protecting customer interests remains the top priority. The decision carefully balances the need for infrastructure improvements with the pressures of rising living costs.
CMA’s Independent Group Chair, Kirstin Baker, commented:
“We found that the additional bill increases requested by water companies were largely unjustified. Our goal was to minimize the burden on customers while ensuring that sufficient investment can still be made in essential improvements.”
Impact on Customers
The CMA’s provisional findings mean smaller-than-expected increases in bills for households across the five regions:
Anglian Water: average bill reduced from £649 to £599
Northumbrian Water: from £515 to £495
South East Water: from £322 to £286 (4% rise compared to Ofwat’s decision)
Southern Water: from £710 to £638 (3% rise)
Wessex Water: from £642 to £622 (5% rise)
Conclusion
This redetermination provides a more balanced outcome, ensuring that water companies can fund critical environmental and service improvements without placing excessive financial pressure on customers. It represents a step toward maintaining affordable and sustainable water services while holding companies accountable for fair pricing and efficient management.
