Citizens Advice has waded into a row between the competition and water watchdogs over new spending rules for the country’s water companies.
According to the charity, households could lose out on a combined £3.7bn across the next five years if the Competition and Markets Authority (CMA) sticks with its decision to back a rebellion against Ofwat’s price controls.
Earlier this year four firms appealed to the CMA after Ofwat published new price proposals which would have drastically cut the amount they could spend.
Under Ofwat’s proposals, water companies would have had to cut bills by £50 per household, as well increasing investment into infrastructure from £50bn to £51bn over a five year term.
13 of the UK’s 17 water companies backed the decision. However, Anglian, Bristol, Northumbrian and Yorkshire contested it.
Last month the market regulator came down in favour of the four, ruling that they could spend £214m more on investment into the UK’s creaking water infrastructure.
Today new analysis from Citizens Advice showed that the CMA’s decision would cost households £50 over the next five years.
In addition, it said that if the CMA upholds its verdict, it could set a precedent for a similar rebellion against energy regulator Ofgem’s new set of price controls, potentially costing households another £63.50.
Alistair Cromwell, acting chief executive of Citizens Advice, said: “This decision is not only poorly evidenced, but also sets a dangerous precedent for other price controls, like energy, where billions of pounds of people’s money is at stake.
“Both Ofwat and Ofgem have made progress towards delivering fairer deals for water and energy consumers. While our evidence shows these two regulators could have gone even further in cutting the excess profits of water and energy network companies, the CMA’s decision risks undermining that progress.”
The body added that it not believe the CMA has provided sufficient evidence to support their decision on the key issue how much it would cost in capital to protect investments.
A CMA spokesperson said: “The CMA is now consulting on provisional findings from its redetermination of Ofwat’s proposed 2020-25 price controls for four water companies.
“As part of this, we will consider all submissions received before making our final decision.”