Water industry regulator Ofwat has confirmed that the water companies in England and Wales have today submitted their AMP6 Business Plans for the period 2015 – 2020.

Ofwat's preliminary analysis of the companies' figures, which have not yet been verified by the regulator, shows that the majority of the companies have proposed price rises either below or in line with inflation.

However, Dee Valley Water is seeking an increase of 8.9% between 2015 and 2020, while Thames Water has proposed raising bills by 11 per cent above inflation in a series of staggered price rises over the five year period.

Ofwat said it will now analyse and challenge companies’ plans – and proposed bill changes - to make sure customers get the right level of service for the right price, while ensuring companies can raise finance to continue to invest in the sector.

Jonson Cox, Ofwat’s Chairman said:

“Ofwat challenged companies to listen carefully to their customers in preparing their plans. Our board made clear that current economic circumstances gave companies an opportunity to deliver falling bills in real terms over the coming five years while maintaining substantial ongoing investment.”

Both Wessex Water and Yorkshire Water have announced they are not taking up their allowed increase in prices in the year 2014/15. This means customers will benefit from lower bills than anticipated in 2014/15 i.e. the companies start the 2015/20 period with a lower average bill than they were allowed.

Ofwat said it is aware that the other companies are currently considering whether to take their full allowed increase in prices in 2014/15.

In April next year Ofwat’s Board will announce its decision on the quality of companies’ plans, including how well they have taken account of their customers’ priorities.

Companies which deliver plans that Ofwat judges outstanding across the board will benefit from a fast-track approval process; plans requiring some intervention will go through a standard process while any company whose plan has significant shortcomings will be asked to resubmit its plans.

The regulator could yet take a red pencil to the business plans over a number of the water companies' proposals for a weighted average cost of capital (WACC) of 4% or above.  In a recent call by Ofwat for water bills to fall in the upcoming Price Review, Chief Regulation Officer Sonia Brown indicated the level Ofwat would like to see for the weighted average cost of capital for AMP6, saying that “the number should start with 3.” 

Final decisions on prices will be made by January 2015, with new bills coming into effect in April 2015.