Having proposed a 10% cut in their July draft decision!

So with one bound Susan Davy wins the jackpot! – Owl

As already reported by Owl, Ofwat has greed to let South West Water (SWW) hike its annual charges to customers from an average of £497 in 2024/5 to £610 by 2029/30, an increase of  £113 or 22.7% at FY 24/5 prices (i.e. excluding inflation). 

The regulator had originally proposed a much smaller increase of £64 or 12.9% in July but has been persuaded by SWW to change their minds. The final result is that Ofwat managed to shave only £14 or 2.2% from what SWW had proposed.

Note the figures above do not take into account the £50 per household government contribution in the South West area, which will be removed for 2025-26 onwards.

Significant changes from the draft decision for South West Water are:

 • Ofwat increased their day-to-day expenditure allowances by £181 million to £2.3 billion for the South West area, and £43 million to £573 million for the Bristol area. This mainly reflects additional allowances for energy costs, business rates, bioresources growth and network reinforcement. Allowances for energy costs and business rates will be adjusted at the end of the price control period to reflect actual changes in prices. 

• Ofwat increased their allowances to invest in new infrastructure and resources, by £106 million for the South West area and £17 million for the Bristol area. This mainly reflects better evidence provided by the company for its cost estimates and the need for investment. It also follows an increase in requested expenditure for the South West area, mostly driven by increased regulatory requirements. For both areas, Ofwat increased allowances for preventing raw water deterioration. This allowance also rises for investing in water interconnectors to improve resilience in the South West area. 

• Ofwat changed some of their performance targets and financial incentive rates. This follows updated performance data for 2023-24, which Ofwat has taken into account in setting targets that are both stretching and achievable. For the South West area, Ofwat increased stretch on water quality contacts, as it is currently a relatively poor performer on this measure. 

Ofwat says that they will continue to hold South West Water to account against its targets for improved service for customers and the environment and expect it to report on its performance every year. If the company does not deliver the expected outputs and outcomes, this will be reflected in lower bills for customers. Where it delivers a better level of performance, it will be allowed to collect more, to reflect the additional benefits to customers it has created.

Download Ofwat’s overview of South West Water’s final determination

NB the Office for Environmental Protection (OEP) has just found that Ofwat was failing to comply with the law as the regulator was not cracking down hard enough on water companies. The notice served said Ofwat was “failing to take proper account of environmental law with regards to duties on sewerage companies and its duty to make enforcement orders” and “failing to exercise its duty under environmental law to make enforcement orders”. – Owl