Water regulator Ofwat has today given its initial assessment of water companies’ business plans for 2020-25. Three water companies – Severn Trent, South West Water and United Utilities – have delivered such high-quality plans that they have already been fast-tracked and given the green light by Ofwat.

The plans from the three companies, which Ofwat said have set a new standard for the sector, set out how they will cut bills by up to £70 in real terms while significantly improving support for vulnerable customers, and deliver real change in the areas that matter most to customers, like cutting leakage.

Fast track status means the companies will receive financial benefit , early decisions and early certainty, and the plans are ready to implement. 

The regulator said that in the coming months, the remaining water companies will have to strengthen their plans so they too deliver for customers.

Anglian, Dwr Cymru, Northumbrian, Wessex and Yorkshire have been categorised as slow track, with further work to do on plans.

Four companies - Affinity Water, Hafren Dyfrdwy, Thames Water and Southern Water – have the most work to do in order to meet the tough challenges Ofwat has laid down for the sector. Significant scrutiny statuis means they will be subject increased regulatory scrutiny and have to substantially rework and resubmit plans.

The three fast track companies have proposed the following real term (before inflation) bill reductions: Severn Trent Water £18, United Utilities £43, South West Water £73. These are the differences between projected 2019-20 and 2024-25 bills in 2017-18 prices.

Across the board, water companies are proposing significant improvements for customers in the period 2020-25, including:

• Help for up to 1.5 million customers struggling to pay their water bills;
• A 15% reduction in leakage – the equivalent of more than 170 billion litres of water per year, which would save enough water for three months’ worth of daily showers for everyone in England and Wales;
• Cutting greenhouse gas emissions by 45%, the equivalent of taking 360,000 cars off the road;
• Up to 80% reduction in pollution incidents; and,
• At least £10bn worth of extra investment to meet more stringent environmental standards, connect new homes and meet increased demand over the coming years.

Ofwat Chief Executive, Rachel Fletcher said:

“We have challenged all water companies to deliver more for less for customers over the next five years.

“They’ve listened to the customers they serve. We’re seeing an increased focus on the things closest to people’s hearts such as keeping bills affordable, cutting leakage, protecting the environment and helping those most in need. Three companies have already stepped up to the mark with high quality plans and stretching commitments to customers for the next five years. The rest of the sector now needs to meet this high standard so that customers across the country get better and more efficient services”.

Upcoming key dates in the 2019 price review include:

• 1 April 2019: companies categorised as either significant scrutiny or slow track must submit revisions to their business plans addressing the shortcomings Ofwat has identified.
• 11 April 2019: publication of draft determinations for companies with exceptional & fast track plans.
• 18 July 2019: Ofwat will publish draft determinations for companies categorised as either slow track or significant scrutiny.
• 11 December 2019: Ofwat will publish final determinations for all companies.

Water UK - announcement is about sheer scale of collective ambition to do more for customers, the environment and the country as a whole

Commenting on Ofwat's announcement this morning about water companies' draft business plans for 2020 to 2025, Water UK Chief Executive Michael Roberts said:

"Today’s announcement is not just about individual company plans, it is also about the sheer scale of collective ambition to do more for customers, the environment and the country as a whole.

“The plans were created after seeking the views of 5 million customers to understand what’s most important to them. Taken together, those plans would mean a decade of falling bills, the most ambitious leakage programme in 20 years, and an expanded five-year investment programme of more than £50 billion.

“There’s also a strong focus on helping the poorest and most vulnerable people in our society – we’re nearly doubling the help for people who struggle to pay their bills. Wildlife and the wider environment will benefit from the plans too, with 8000km of rivers due to be improved, and the Environment Secretary recently said the plans showed that the water industry was making good progress.

“Companies in England and Wales will be considering carefully the initial assessments published today by Ofwat and, where relevant, identifying where they can go even further before finalising their plans.”

Click here to view Ofwat’s assessment of water companies’ business plans in full