Water bills to increase for Sussex households; Southern Water & South East Water customers affected
Sussex households will have to pay higher water bills than previously announced, following a ruling by the UK’s competition watchdog.
Five water firms – South East Water, Southern Water, Anglian Water, Northumbrian Water, and Wessex Water – have been provisionally allowed to raise bills beyond the increases originally approved by Ofwat.
An independent group of experts within the UK’s Competition and Markets Authority (CMA) agreed bills could rise on average by an extra three per cent. It comes after the water companies argued that an average increase of 36 per cent over the next five years, previously agreed by Ofwat, left them unable to meet the regulatory requirements set out for them, the CMA said.
The CMA estimates South East Water bills could rise to an average of £286 per year – a four per cent increase – and Southern Water bills could rise to an average of £638 – a three per cent increase.
The increase could result in an extra £556 million in revenue across the five firms, according to the CMA.
Chair of the independent group, Kirstin Baker, said: "We’ve found that water companies’ requests for significant bill increases, on top of those allowed by Ofwat, are largely unjustified.
"We understand the real pressure on household budgets and have worked to keep increases to a minimum, while still ensuring there is funding to deliver essential improvements at reasonable cost.”
As the CMA’s decision is provisional, Ofwat and the water firms have the opportunity to dispute the decision before the CMA finalises it.
A CMA spokesperson added: “The additional funds should allow the companies to meet new legal requirements and to fund delivery in critical areas, like supply resilience and pollution reduction.
"The group also accepted the need for slightly higher investor returns than allowed by Ofwat.
"This is in part because the cost of equity has increased due to rising interest rates over the last year which is making investment more costly to secure.
“The group has decided to largely reject companies’ funding requests for new activities and projects beyond the significant increases already allowed by Ofwat.
"Some exceptions were made where the group found that more spending was needed to deliver benefits to consumers, or that companies’ ability to invest had been underfunded.
"The group has also tied funding to defined outputs and required levels of performance, making clear that customers should benefit from bill increases they are bearing and that companies should be penalised when they do not deliver.”