Water price increase with bills to rise in 2016/17

Water bills are to go up this year, despite a recent report making clear that we already pay too much.

We will all pay an average of £389 on our water bills this year, Water UK has announced. That’s an increase of £2 on the previous year.

Water UK, which represents the nation’s water and sewerage firms, attempted to justify the increase, saying that it was in line with the five-year plans developed by every water firm and confirmed with the regulator Ofwat back in 2014.

Ofwat took credit for the below-inflation rise (it’s the equivalent of 0.2%), with Cathryn Ross, chief executive, saying that this was the result of the regulator’s “tough 2014 price review” at which it had challenged water firms to listen and respond to their customers.

Ross claimed this had led to an additional £3 billion of savings for families across the nation.

But we already overpay!

However, the rise comes just a month after the water industry was slammed by the Parliamentary Public Accounts Committee (PAC) for overcharging millions of customers.

The problem is that Ofwat works with the various suppliers to determine a limit that the water firms can charge customers.

And the regulator has consistently overestimated water firms’ financing and tax costs, leaving water firms to enjoy massive windfall gains of well over £1 billion since 2010, a situation that the MPs described as appalling.

So the bill you are already paying too much for is going up yet again!

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You can’t even switch

What makes the situation even worse is that you can’t even shop around for a new supplier, as water is one of the few areas where you are stuck with a single supplier.

That said, the Government has talked about introducing some competition by allowing you to choose between rival suppliers for billing and customer services by the end of this Parliament. You won’t be able to switch who actually supplies the water though.

Struggling to pay

Ofwat admits that unpaid water bills are an increasing problem in England and Wales, a situation that won’t be helped by any price rise, even a relatively small one.

A report from the water regulator back in December found that £2.2 billion is now outstanding in unpaid water bills, with the average cost the equivalent of around £21 a year for every household across the country, compared to £17 back in 2009/10.

While awareness of various support schemes open to struggling customers is increasing, most suppliers have failed to hit their initial targets for customers signing up to social tariffs, which offer cheaper charges to those people struggling to pay their bills.

The Consumer Council for Water (CCWater) said that it had so far helped 15 suppliers to launch these tariffs, with more in the pipeline this year, but more still needs to be done. Tony Smith, chief executive of CCWater, said: “Affordability is still a concern for many low-income households who are already struggling to pay. Our research shows that one in eight customers in England and Wales are already finding it difficult to afford their water bill.”

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