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Small businesses face higher water bills as Ofwat looks at overhauling price cap rules

·1-min read
Oftwat’s rule change is expected to increase costs for the average small business (Ian Nicholson/PA) (PA Archive)
Oftwat’s rule change is expected to increase costs for the average small business (Ian Nicholson/PA) (PA Archive)

Ofwat is considering introducing new measures that would increase the price cap on water bills paid by the average small business in England, at a time when utility costs and how they are regulated are a hot political and social issue.

The regulator is considering dumping regional limits on rates in England and bringing in a single cap for the country. It says it wants to limit annual movements in bills to “around 5% before inflation”. The Bank of England forecasts inflation will reach over 13% this year, with some City experts saying it could be nearer 20%.

Streamlining the rules will increase the average bill by about 0.1%  before inflation for companies on dual tariffs covering water and wastewater, it said, though there will be falls in some regions.

Ofwat has faced a public outcry at the amount of sewage water companies are allowed to discharge in UK waters and at the amount of leakage from mains supply at time of hosepipe bans during the summer drought over much of the country, including London and the South East.

The price cap on energy bills has dominated much of the news this summer, with the electricity regulator Ofgem facing criticism for increasing the frequency of reviews, when increased wholesale costs can be passed on to consumers.

Ofwat’s consultation on the new price cap runs until 5pm on Friday, October 14 and applies to business customers using under 0.5 million litres of water a year.

“Competition is working less well for smaller business customers, so our proposals aim to protect these customers whilst supporting a sustainable market where efficient retailers can earn a fair return,” said Gerogina Mills, Ofwat’s business retail market director.