Water industry regulator Ofwat has called for th development of a joint water and fuel poverty indicator in its response to the Hills Fuel Poverty Review call for evidence.

The response covers the following issues:

• Water affordability risk – Ofwat's indicator and methodology dealing with water affordability.
• Distinguishing fuel poverty from general poverty – Ofwat thinks that the structure and distribution of water bills makes water affordability distinct from general poverty. The same can hold true for fuel poverty too.
• Using a basket of indicators – Ofwat's advisory group recommended that a basket of indicators helps to capture affordability better, and prevents an undue focus on a single measure of a multi-dimensional issue.
• Designing income-based indicators
• Expenditure-based indicators – Ofwat said it may be effective to look at the bills that customers can afford, given their other outgoings. This may be a better way of looking at affordability than bills as a proportion of income.

The regulator believes that there are advantages to working together to develop joint thinking and measures on poverty-related issues and is interested in exploring further how it can work with the Review team and DECC's fuel poverty team. Ofwat says that there is a case for developing an indicator that captures the affordability of expenditure on energy and water, because both are essential services.

Click here to read Ofwat's response in full.