In April, water bills in England saw significant increases for customers from five companies: Anglian, Northumbrian, South East, Southern, and Wessex, affecting around 14.7 million people. Although customers experienced higher costs, they may have avoided even steeper hikes. The five companies, after appealing to the Competition and Markets Authority (CMA) regarding their billing, found that their requests for higher price adjustments were largely denied. The CMA determined that the increases were largely “unjustified” and only allowed 21% of the additional funding the companies sought, amounting to £556 million to be paid by household and business customers.
For instance, Southern Water requested a 48% increase to £710, but the CMA settled on £638. Meanwhile, Anglian and Northumbrian received just a 1% adjustment. The process involved the CMA rerunning Ofwat’s pricing decisions in under a year, contrasting with Ofwat’s standard four-year cycle, raising questions about the efficiency and logic of the regulatory framework.
The broader regulatory environment is set for a significant overhaul, as the government plans to replace Ofwat due to past failures related to environmental issues and financial management. The ongoing situation raises concerns about how companies justify their appeals to regulatory bodies. For example, if a company like Anglian requested a 10% increase but received only 1%, it may call into question its initial claims for needing more funding.
Additionally, the situation at Thames Water remains critical, with decisions pending on possible interventions, which could lead to further instability in the sector. The deadline for Thames to appeal to the CMA is approaching, but it may ultimately become irrelevant if the company is subject to special administration or other changes in management.
Source: https://www.theguardian.com/business/nils-pratley-on-finance/2025/oct/09/bills-water-torture-so-is-regulatory-process-england