Anglian Water has submitted its Statement of Case to the Competition and Markets Authority, following its referral of Ofwat’s Final Determination for the 2019 price review to the competition regulator.

The water company is asking the CMA to consider if the water sector regulator has struck the right balance between bills and investment.

Anglian’s plan proposed investment of £6.46bn alongside bill reductions of around 1%, on top of a price drop of 10% in the last five years. Ofwat’s Final Determination allowed expenditure of just £5.71bn, a gap of £750m, with bills coming down by around 10%.

Commenting on its CMA appeal, Anglian Water Chief Executive Peter Simpson said:

“It has never been clearer that a resilient water industry able to absorb shocks and stresses is crucial to the UK economy.

“That resilience can only be adequately delivered when we plan, invest, and don’t kick problems down the road – particularly when we know that the future is ever more uncertain and volatile.

“With every passing month the impacts of a changing climate and a growing population become clearer. Our customers were clear – they expect us to invest now to deal with these challenges, not wait until they become more expensive to deal with. Our plan offered that, while also reducing bills.

“Our Statement of Case lays out why we feel our plan is the right one for our region.

“Right now, it’s critically important we do all we can to look after our customers and our colleagues. But we can’t forget that we must also address the longer-term needs of the environment and the economy while improving the resilience of critical infrastructure.”

Since privatisation, Anglian’s customer bills have increased overall by just 10%, the smallest increase of all companies, compared to an industry average of 46%. In the last five years, Anglian bills have fallen by c.10%, twice the national average.

Headline summary of Anglian Water’s Statement of Case

The headline summary Of the Statement of Case Anglian Water has submitted to the CMA is as follows:

1. Anglian is a respected, sector-leading company: for almost two decades the company has been upper quartile (and often first) on leakage, service, and performance. The company was Utility of the Year in 2018, Responsible Business of the Year 2017, won a Queen’s Award for Enterprise for Sustainable Development, and was Glassdoor’s Best Place to Work 2019.
2. Anglian was the first in its sector to change its Articles of Association to embed public interest within the business. Anglian’s purpose is to bring environmental and social prosperity to the region it serves through its commitment to love every drop.
3. Anglian’s track record and its defined purpose underpin its rationale for asking Ofwat to refer its statement of case to the CMA.
4. The company’s challenges are unique: it serves the driest and one of the fastest growing parts in the country, with slow moving rivers running through intensive agricultural landscapes. Combined with climate change, these place particularly acute pressure on the business.
5. The case for urgent investment in the face of the climate crisis is backed by:
6. Ofwat’s duty “to secure long-term resilience in the face of environmental pressures, population growth and changes in consumer behaviour” (Water Industry Act 2014).
7. The National Infrastructure Commission’s 2018 report that concludes failing to invest now doubles the cost for customers over 30 years
8. The National Audit Office’s March 2020 report into water resources which recommends urgent action to ensure that supply can continue to meet demand
9. Anglian’s (‘A’-rated) customer engagement, which heavily favoured investment now to tackle future need.
10. Anglian’s plan, framed by its Strategic Direction Statement, supported this. For a bill reduction of around 1%, the company proposed a step change in resilience and environmental enhancement, with a Water Resources Management Plan that is eight times larger than PR14, and a Water Industry National Environment Programme (WINEP) which has double the number of obligations compared to the last review.
11. The plan was backed by Anglian’s customers, and by the independent Customer Engagement Forum.
12. Anglian’s customer bills have seen the smallest increase in the sector since privatisation, going up by just 10% (compared to an industry average increase of 46%). Anglian’s average household bill dropped by around 10% in the last five years, twice the national average.
13. Ofwat’s FD underfunds Anglian’s plan for base expenditure; for enhancement expenditure; and for growth. The shortfall is just under £750m. This underfunding undermines its ability to:

• properly finance its functions
• maintain and enhance services to customers
• maintain the health of network assets
• ensure the region is resilient to increased risks of drought and flooding
• support sustainable housing, population and economic growth
• continue to drive down leakage and maintain its frontier position
• ensure that future customers do not pay more than they should because opportunities to address these challenges were not taken as part of PR19