News Feature | December 6, 2013

As UK Regulator Examines Rates, Its Own Costs Are Questioned

By Sara Jerome
@sarmje

londonreg

The water regulator for England and Wales is under fire for costing bill-payers nearly £20m after hiring expensive consultants at the same time it is pressuring utilities to keep their rates low.

Ofwat hired PricewaterhouseCoopers (PwC) consultants to scrutinize business plans submitted by water companies, the Independent reported. The utilities are required to hand in proposals for rates and investment. 

"However, to cover PwC's contract, which is valued at £6.5m, and the cost of changes to the way that prices are set, Ofwat has trebled the license fee it charges water companies to 0.3 per cent of turnover. This represents a rise of £18m to £27m, which industry sources say will inevitably be covered by increases to bills," the report said. 

The regulator said its efforts are focused on getting favorable rates for consumers. 

Jonson Cox, Ofwat chairman, said in the Telegraph: “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.”

The water industry is not entirely on board with that.

"Thames Water has revealed that it aims to hike prices by 11 percent, between 2015 and 2020, despite the regulator vetoing its earlier attempt to increase prices by 8 percent over the coming year," the International Business Times reported this week

Thames Water said it needs the rate hike to cover the cost of the Thames Tideway Tunnel, also known as the "super sewer." The super sewer is a controversial and expensive project that would provide one of the largest sewer networks in Europe, Water Online previously reported

"This exceptional project, six times larger than anything previously delivered by the UK's privatized water industry, will provide urgently needed additional capacity to a Victorian sewer network that London has comprehensively outgrown," Thames Water said in the Independent this week. 

Tap water rates are a hot political issue in the U.K., Water Online previously reported. Prime Minister David Cameron "ordered ministers to examine how they could force water companies to cut household bills," the Guardian reported

Image credit: "London, England," © 2008 TJ Morris, used under an Attribution 2.0 Generic license: http://creativecommons.org/licenses/by/2.0/

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