Water companies given green light to raise prices to offset Covid debt
Water companies will be allowed to bump up their prices on a temporary basis from next year in order to offset extra bad debt acquired as a result of Covid-19.
In a statement released today, sector regulator Ofwat said that from April water companies will bear 25 per cent of bad debt costs where these are more than 2 per cent of non-household revenue, and non-household customers will bear the rest.
The watchdog said that the adjustment to the price cap would last for a minimum of two years.
As a result of measures put in place to tackle the coronavirus pandemic, the amount of consumer bad debt facing water firms has risen over the last year.
Utilities have been struggling with a sharp drop in water consumption by businesses as virus restrictions have moved people out of office buildings and into remote working.
The largest water companies in the UK include Thames Water, United Utilities, Severn Trent and the South West Water owner, Pennon.
Ofwat said that the changes would “protect the longer term interests of customers by reducing the risk of systemic retailer failure”.
Georgina Mills, business retail market director at Ofwat said: “By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”