CMA stands firm in Bristol Water final findings

The Competition and Markets Authority (CMA) has issued its final decision on Bristol Water’s claims against Ofwat’s price control, standing firm on its decision to back the regulator’s call for lower customer tariffs.

The CMA has said that Bristol Water’s tariffs must be cut by 16 per cent for the period 2015 to 2020, a slightly more lenient challenge than the 19 per cent called for by Ofwat but still substantially higher than the 6 per cent put forward by Bristol in its original plan.

The CMA’s final findings in the appeal investigation, called for by Bristol Water in March, found that the water company’s wholesale expenditures should be allowed to reach £428.6 million which is broadly in line with its provisional findings reported in July.

In Ofwat’s price controls the expenditure levels were set at £409 million while Bristol Water’s estimate was of £537 million.

The CMA said it had rejected several projects proposed by Bristol Water because it did not believe that they were fully justified and in the interests of customers.

“Overall, we considered that a small increase from the Ofwat determination was justified,” said the CMA’s inquiry group chair, Anne Lambert.

Despite clawing back just under £20 million over the five-year price control period Bristol Water’s chief executive Luis Garcia said the investigation had proved “worthwhile”.

“[T]his is an improved outcome that we are confident will better serve Bristol Water’s customers by allowing us to maintain our network and invest in essential improvements,” said Garcia.

Ofwat chief executive Cathryn Ross said that although the CMA’s decision slightly reduced the level of bill reductions for customers it “is still an excellent result for Bristol Water’s customers”.

She added: “We hope that Bristol Water will now review its approach to our five-yearly price reviews and take forward these lessons at future reviews.”