Five more water companies have asked the UK’s competition watchdog to allow them to raise bills even higher than they have been allowed to the end of the decade.
Southern Water, Anglian Water, South East Water, Northumbrian Water and Wessex Water said on Tuesday that they had asked Ofwat, the water regulator for England and Wales, to refer its ruling on their business plans for 2025 to 2030 to the Competition and Markets Authority (CMA).
They join Thames Water, which announced its decision to appeal last week, meaning six firms representing the majority of water customers in England are asking to charge customers more than was agreed.
Ofwat sets bills for England and Wales over five-year periods. Its latest settlement, approved in December, allowed water companies to raise average prices by 36% over five years from 1 April, before adding inflation.
However, the water companies who appealed all argue that the allowed increases would not be enough to invest in pipes, drains, reservoirs and treatment works.
The six appeals represented the most against Ofwat’s price determinations since privatisation in 1989. Four companies appealed in 2020, gaining some concessions.
Chris Walters, Ofwat’s senior director for the price review, said: “It is the right of companies to request a redetermination by the CMA. We will be re-stating our case as part of this process.
“Final determinations were based on a robust examination of all funding requests made by companies to ensure every pound of customer bills provides value for money, delivers real improvements and enables the sector to attract the investment it needs.”
Southern had already been allowed a 53% increase for its 4.7m customers – the largest increase of any company. However, the Southern Water chief executive, Lawrence Gosden, said that settlement “would not enable us to deliver the environmental and performance improvements and new infrastructure that our customers and communities rightly expect”.
The company, which is under financial pressure, also announced a £900m fundraising on Tuesday. It said the equity raise, which it hoped to conclude by the end of June, was not conditional on the outcome of the CMA process.
Anglian, which serves 4.3m customers across the east of England and Hartlepool, wants to raise bills by 32%, compared with 29% allowed by Ofwat. Anglian chief executive, Mark Thurston, argued that the company needs to invest in infrastructure for the Cambridge-Oxford arc, part of chancellor Rachel Reeves’s growth plans. He said that “additional pressures in the regulatory settlement are unacceptable”.
Wessex Water, which serves 2.9m customers in south-west England, said that its bill increase of 21% was “not sufficient to meet customers’ expectations and deliver obligations”. Northumbrian Water, with 2.7m customers mostly in north-east England, said Ofwat had made a “misjudgement” in only allowing a 21% increase.
South East Water, which has 2.3m customers in the home counties, said a bills increase of 24% “presents a risk to water security”. Last year, the company said it needed a cash injection to stay afloat.
Thames Water, which is on the verge of financial collapse, had wanted to raise bills by 59% over the next five years, arguing that it needed the extra funding to invest and improve its services. Ofwat had approved a 35% increase.
The company on Tuesday received court approval for a £3bn emergency debt package that will keep it operating until the end of the CMA process.
David Henderson, Water UK’s chief executive, said: “Water companies need to invest billions to strengthen and expand infrastructure … Although many water companies can live with Ofwat’s decisions, an unprecedented six … feel that they have no choice but to appeal to the Competition and Markets Authority.
“Companies hope it will overturn Ofwat’s decisions so they can get on with the job of helping deliver the government’s overriding national priority – economic growth.”
The CMA is under pressure to deliver on the Labour government’s “pro-growth” agenda. Its chief executive, Sarah Cardell, told the Guardian that where the watchdog needed to “go further is to make sure that perceptions of the regime haven’t created a chilling effect”.
