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MPs: Poor oversight by Ofwat has lead to higher water bills


A committee of MPs have claimed that poor oversight by regulator Ofwat has lead to millions of families paying too much for their water.

A report completed by the Public Accounts Committee (PAC) revealed that the water regulator, Ofwat, regularly overestimated water companies’ taxing and financing costs when they were setting price caps.

The PAC is now asking the regulator to review the way it assesses water companies’ costs of debt and tax and seek out areas for improvement.
The MPs also raised concerns about customers in certain parts of the UK where water is scarce having to pay to help develop new capacities, despite the fact that water trading between companies may be implemented in the near future.

The UK’s water companies made windfall gains of at least £1.2 billion between them last year, while household water bills averaged just under £400.

PAC chairwoman Meg Hillier said:
"Ofwat was set up to protect the interests of customers, most of whom have no choice over who supplies their water yet must pay bills typically running to hundreds of pounds.

"Many householders will therefore be appalled to learn these bills could have been smaller had Ofwat adopted a different approach to setting price limits for water companies.

"This approach must be reviewed as a priority.”

Ofwat said that it would “carefully consider” the PACs report. Ofwat chief executive Cathryn Ross said:

"Holding companies to account and protecting customers is at the heart of what we do.

"That's why we've made sure bills will fall by 5% by 2020. We will carefully consider the thoughts of the PAC."

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