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UK's Ofwat to let water companies raise prices temporarily as costs rise

UK regulator allows water companies to raise prices temporarily
UK regulator allows water companies to raise prices temporarily   -   Copyright  Thomson Reuters 2021
By Reuters

– Britain’s water regulator on Monday said it would allow retailers to increase prices they charge their non-household customers temporarily from next year to offset higher bad debt costs due to the COVID-19 pandemic.

Water companies from April will bear 25% of bad debt costs where these are more than 2% of non-household revenue, and non-household customers will bear the rest, the Water Services Regulation Authority (Ofwat) said in a statement.

The regulator added that the adjustments to price caps would apply for a minimum of two years.

Utilities have been struggling with a sharp drop in water consumption by businesses as virus restrictions have moved people out of office buildings and into remote working, while defaults have also been rising.

Some of the largest water companies in Britain include Thames Water, United Utilities, Severn Trent and Southwest Water owner Pennon. Their shares were down marginally on Monday by 1325 GMT.

“These decisions aim to protect the interests of non-household customers in the short and longer term … as the business retail market continues to feel the impacts of COVID-19,” said Georgina Mills, Ofwat’s business retail market director.

Ofwat also confirmed on Monday that it planned to start its wider review later this year of the price caps for the Retail Exit Code, which was put in place to give protection to business customers.