Northumbrian Water to challenge regulator over price controls

North East water firm wants to balance reductions to bills with environmental improvements

The region’s water supplier is taking on the industry’s water regulator in a battle that could affect bills for thousands of households.

Northumbrian Water had issued a five-year plan in 2018 in which it said it wanted to reduce water bills by around 12%, saving households an average £40 a year.

But the plan was rejected by Ofwat last January - along with similar plans from most other water companies around the UK - with the regulator asking the water company to reconsider its plans for affordability, customer service, innovation and resilience.

Northumbrian Water had until Saturday to accept those proposals but has now asked Ofwat to refer its decisions to the Competition and Markets Authority (CMA) to be reviewed. Water firms in Yorkshire, Bristol and East Anglia have also gone to the CMA, though others have accepted the Ofwat rulings.

Northumbrian Water chief executive Heidi Mottram said Ofwat’s proposals were “contrary to the long term best interests of our customers” and would threaten investment in the North East’s water systems.

It is understood that Ofwat wants Northumbrian Water to reduce its bills further, though the company has increased its original plan to a 14% reduction.

The North East firm also wants to do more work to reduce potential the impact of climate change on the region, and feels Ofwat’s proposals do not go far enough in that area.

The row comes after Ofwat set the water industry a number of major challenges, with suppliers asked to bring down bills but also cut leaks and make other environmental improvements.

Ms Mottram said: “NWL is a high performing and efficient company with a long track record of delivering for our customers and protecting the environment.

“We have listened carefully to our customers in the development of our business plan. Our assessment of the PR19 Final Determination is that it is contrary to the long term best interests of our customers and doesn’t provide for sustainable investment going forward, to the detriment of all our stakeholders.

“We have therefore asked Ofwat to refer the PR19 Final Determination to the CMA for review.”

Ofwat’s original review of Northumbrian Water’s plan praised it for “sector-leading bill reductions” but said the company had “proposed financial incentives are too low to drive the performance that customers expect” and highlighted “a lack of evidence in some areas on long-term resilience.”

The water company had submitted plan after talking to thousands of its customers, and says that more than 90% of those questioned wanted a balance between bringing down bills and environmental improvements.