Water provider told to slash prices by 17%

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A water company serving more than a million customers has been told to implement steep real terms price cuts after it rejected an initial ruling by the regulator.

Bristol Water had been ordered by Ofwat to lower household bills by 19%, before inflation, over the 2015-20 period.

The firm rejected the price determination – arguing this would not leave it with sufficient funds to run the business and invest – and was referred to the Competition and Markets Authority (CMA).

Bristol Water said its plan would be to reduce household bills instead by a smaller 6%, before Retail Price Index (RPI) inflation.

But the CMA said today in a provisional finding that after a detailed assessment of its cost and spending needs, the figure should be 17%. A final determination must be issued by September 3.

CMA inquiry group chairman Anne Lambert said: "Our provisional findings would result in substantial reductions in bills, as compared with Bristol Water's plans, although they involve a small rise above the price limits set by Ofwat.

"We provisionally rejected several projects proposed by Bristol Water which would have increased its expenditure – and ultimately bills – because we did not consider they were fully justified and in the interests of customers."

Using a 2012/13 price base to express the real terms change suggested a fall in the average household bill from the company of £32 over the period from 2015 to 2010, according to the CMA.

Bristol Water chief executive Luis Garcia said: "The provisional findings are positive in some areas.

"We will continue until the conclusion of the process on September 3 to ensure we can deliver what our customers want – a reliable and quality water supply – at an appropriate bill level."

Bristol Water supplies water to around 1.2 million customers in the Bristol area.

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