Suppliers could factor water scarcity into charges as part of Ofwat proposal to reduce consumption
Water companies could be allowed to raise bills for customers during periods of drought under proposals being considered by the sector’s regulator for England and Wales.
Suppliers would be permitted to factor “water scarcity” into bills as part of efforts to reduce consumption under Ofwat’s plans, which are being likened to surge pricing – the practice where private hire firms raise taxi fares at times of higher demand.
The proposals come just a few days after the prime minster, Andy Burnham, said he was angry with water companies and accused them of treating their customers like a “blank cheque” after more than a dozen firms were given the green light to raise water bills even higher.
It emerged last Thursday that five companies – Southern Water, Thames Water, Severn Trent, Wessex Water and South East Water – would be allowed to raise bills more than originally planned before the end of the decade to allow for billions of pounds of extra spending on repairs and infrastructure.
The surge pricing proposals, first reported by the Sunday Telegraph, come after the 30 July conclusion of Ofwat’s consultation on changing the rules relating to wholesale charging, with the regulator due to share its final decision shortly.
Public anger over the behaviour of water companies has soared in recent years as bills have continued to climb even while sewage has flowed into the nation’s waterways and firms have increased bosses’ pay and handed out millions of pounds in dividends to shareholders.
During an exceptionally hot and dry summer, leading to almost three-quarters of England and all of Wales being declared officially in drought, suppliers have also come under fire for failing to save water lost through leaky pipes, which campaigners say far outstrips the amount that could be saved through a nationwide hosepipe ban.
An Ofwat spokesperson said: “The efficient use of water is in the best interests of everyone, including businesses. The options we are progressing would support greater consideration of water scarcity and efficiency by water companies when setting their charges, and encourage more tariff innovation.”
Several water companies have been carrying out charging trials over the past few years aimed at making bills more affordable and, potentially, reducing demand.
South West Water, which supplies water to about 1.8 million customers across south-west England, including Cornwall and Devon, is trialling a “rising block tariff”, where about 500 household customers are charged a cheaper rate for using a lower amount (or “block”) of water and progressively higher prices for higher consumption.
The company said 90% of its customers would see lower bills on this trial, according to its assessments.
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Anglian Water, which supplies 7 million customers across the east of England, the UK’s driest region, and South West Water are also trialling charging customers more for water used in the summer than in the winter months.
The Guardian understands there are no government plans for nationwide surge pricing for water bills.