OFWAT needs to rethink its role

PAC report on OfwatCommenting on the Public Accounts Committee report, Economic Regulation of the Water Sector (13 January 2016), Karin Smyth said:

“The Committee’s investigations concluded that water regulator Ofwat needs a big rethink on its role in shaping the prices charged to householders for their water supplies. In setting the price limits it imposes on water suppliers Ofwat has been over-estimating those companies’ finance and tax costs. The customer has borne the brunt of this inefficiency.

“The water regulator has allowed water suppliers to make windfall gains which have then not been shared in a structured way that would give customers in Bristol and elsewhere the fair deal they deserve.

“In short, the privatised water companies have made a great deal of money because customers’ bills have been higher than they needed to be. Unlike gas, electric and broadband, householders don’t have the choice to shop around for a better deal on their water supply, so Ofwat’s role is absolutely vital.

“When thousands of people across Bristol are struggling to pay their household bills the last thing they need is a price regulator that is found to be failing to effectively regulate. Many people will look at this and think that as far as they’re concerned ‘Ofwat had one job, and they didn’t do it properly.’ They will rightly feel aggrieved and consider Ofwat has sold them short.”