Water firms vow to keep bill rises below inflation

Suzie Neuwirth
WATER companies yesterday confirmed that they would not be raising prices above the inflation rate next year, after environment secretary Owen Paterson called for the industry to reconsider price hikes.

In a letter to all of the major water firms, Paterson said the government is “encouraging water companies to look closely at any price increases, introduce social tariffs for vulnerable customers and crack down on bad debt”.

He also outlined plans for a new independent body to handle complaints.

Tony Wray, chief executive of FTSE 100-listed Severn Trent, confirmed that the water supplier would keep any rises below the rate of inflation next year.

“We know that many of our customers’ incomes have been squeezed and it’s right we should do what we can to keep water bills low,” he said.

Wessex Water, one of three companies which has already introduced social tariffs, vowed to keep bill rises below inflation for the next six years.

A spokesperson from Water UK, which represents the water companies, also told City A.M. that bill rises would not be rising above inflation next year.

The debate into the cost of living has been in the spotlight since Labour leader Ed Miliband accused big energy firms of profiteering and pledged to freeze bills if elected.

Unlike the energy industry, domestic customers cannot switch water suppliers. Water price increases have gone up in line with inflation in recent years.

Regulator Ofwat resets price limits for each water company every five years, with the next review in 2014. It said this month it planned to block an eight per cent price hike proposed by Thames Water because it was not justified.