Ofwat has warned four water companies that it has “substantial concerns” about their proposed business plans for the next five years.
The regulator said there is a “significant gap” between its view of efficient costs for retail and wholesale costs and the revised proposals of Anglian Water, SES Water, Thames Water and Yorkshire Water for the 2020/25 period.
Anglian Water, Thames Water and Yorkshire Water have asked Ofwat to allow them significantly more money than they currently spend on wholesale water supply and wastewater services, while SES Water is seeking increasing costs for providing retail services.
The regulator’s price review methodology set out in December 2017 expects water companies to “make a step change in efficiency” by 2025, allowing companies to deliver better service to customer, protect and improve the environment while keeping bills low.
The early notice of concerns to the water companies will give them additional time to review their costs before submitting further information at the end of August.
Ofwat Senior Director David Black said: “We said we would scrutinise each and every plan in detail to ensure they are robust enough to deliver a high quality, affordable and resilient service to customers in the next five years and beyond. We are disappointed that revised proposals from Anglian Water, SES Water, Thames Water and Yorkshire Water have not yet risen to the challenge we have set them.
“For this reason, we have taken the step of writing to these four companies now to allow them additional time to reconsider and ensure they are in the best interests of customers.”
Earlier this year, the regulator fast-tracked Severn Trent Water, South West Water and United Utilities’ business plans – they set out proposals to reduce bills for customers by between 5% and 15% by 2025.