Water companies urged to provide more help to struggling customers

Ofwat and the Consumer Council for Water (CCW) have welcomed water companies’ efforts to ease cost-of-living pressures but urged them to provide even more help to struggling customers.

They issued the call for action as they published the plans submitted by water companies in December for relieving pressure on customers’ finances, including reducing the impact of inflation on bills for 2023/24.

Ofwat’s main focus is the social tariffs for customers struggling to pay their bills, which are offered by all water companies.

The regulator said some companies – South Staffs, Cambridge, SES, Severn Trent and Thames Water – are raising their income thresholds to extend eligibility to more customers, whilst others are increasing the discounts available. In the case of the latter, Ofwat noted that Southern Water is increasing its discount from 25 to 45%, with customers most in need receiving a 90% discount.

Some companies – Severn Trent, Southern and Wessex Water– are also seeking to simplify qualification criteria and processes, and even more – Northumbrian, Portsmouth, South West, Bristol, South East and Southern Water – are looking to facilitate the automatic enrolment of customers, for example, through data sharing arrangements with local councils and the Department for Work and Pensions.

Ofwat said a small number of companies – Welsh, SES and Yorkshire Water as well as Hafren Dyfrdwy and United Utilities – have made their own financial contributions to social tariffs. Meanwhile, Severn Trent has added capacity for an extra 100,000 customers through efficiencies in its business operations.

However, most social tariffs are funded through cross-subsidies from other billpayers. Ofwat said companies looking to expand their social tariffs through cross-subsidies must engage with customers to establish the level of support they find acceptable to fund as Anglian Water, Portsmouth Water and Hafren Dyfrdwy talked about doing in their plans. It also encouraged more companies to contribute their own money and free up funding through efficiencies.

The regulator additionally noted plans by Thames and Welsh Water to provide temporary support to customer who fall just outside of the eligibility criteria for their social tariffs but are nevertheless struggling with bills. Welsh Water has been piloting its initiative this month, with the intention of rolling it out later in the year.

Other measures mentioned in companies’ plans included one-off payments to customers, with Yorkshire Water highlighting a £71 payment to customers on its support scheme and Affinity stating its intention to make a payment to as many as 30,000 customers in 2023/24.

Furthermore, Ofwat said four companies – Bristol, Severn Trent, Portsmouth and Wessex Water – are deferring some of their allowed revenues for 2023/24 to subsequent years, when inflation adjustments are expected to be lower, to avoid large changes in bills.

Whilst welcoming these various initiatives and others, Ofwat said it would like to see water companies do more to raise awareness of the support available, communicate consistently as a sector and remove barriers to access. The regulator pointed to its recent research which found that only a third of billpayers are aware that financial support is available from water companies.

In particular, Ofwat said there is variation in the visibility companies’ social tariff support. Some companies have messages prominently displayed on the home page of their websites, with accompanying video explainers. Other websites require customers to make multiple clicks to find out about the support available.  Northumbrian, Southern, Thames and Wessex Water as well as United Utilities and Hafren Dyfrdwy were all held up as examples to follow in this regard.

The regulator said some companies also provide limited channels for customers to access social tariffs, with bad examples including customers having to print off and complete pdf forms or call the company by phone. It urged companies to review the effectiveness of their application processes so customers can apply using a communication channel that suits them.

It said companies should have alternative contact methods for offline customers, noting that some have chargeable phone numbers to call for support, which could deter some people from getting in touch.

Positive examples highlighted by the regulator included: Thames Water’s plans to integrate a review form into its billing system in 2023 so customers can find out their eligibility for support and an agree a payment plan in one interaction; Northumbrian Water’s One Call initiative, whereby volunteers from the company have worked with housing associations to offer eligibility assessments to their tenants via text message; and Hafren Dyfrdwy’s Approvers Programme, which enables external partners such as Warm Wales, Citizens Advice and Age Cymru to sign up customers for support schemes.

Ofwat chief executive David Black said: “We welcome the different actions that companies are taking to help those who need it most. The scale of cost of living challenges mean that this is and must remain a priority – water companies need to continue to improve the support they offer customers.

“With households facing unprecedented pressures on their finances, customers will expect to see water companies, and their shareholders, go above and beyond to support them”.

CCW chief executive Emma Clancy said: “We’ve seen some good examples of water companies ramping up their efforts to take the worry out of water bills for customers and we particularly applaud those that are putting in shareholders’ own money to bolster support.

“There is no room for complacency though and the prospect of future bill increases, fuelled by high inflation and the price tag of environmental investment, means companies will have to do even more to support low-income customers. The case for a new water affordability scheme to provide fairer and consistent support for households struggling to pay their bill has never been more compelling.”