Welsh Water proposes further bill cuts

Welsh Water has proposed further cuts to average bills for 2015-20, bringing the total reduction to six per cent before inflation.

The proposals form part of Welsh Water’s revised business plan for the next AMP cycle it submitted to regulator Ofwat on Friday.

In its original business plan submitted in December, the company proposed a 4.8 per cent reduction compared with current levels.

The move follows the publication of draft determinations for the enhanced companies South West Water and Affinity last week. Both had proposals to reduce bills further – by 7 per cent and 11 per cent respectively – accepted by Ofwat.

Welsh Water’s latest proposals will see average household bills fall by £26 compared to current prices.

The company said it was able to reduce bills further by accepting a lower cost of capital following Ofwat’s  announcement in January that its target weighted average cost of capital (Wacc) is 3.85 per cent for 2015-2020, down from 5.1 per cent in the current cycle. The company said it still plans to invest £1.5 billion in its network during the next cycle.

Chris Jones, Welsh Water chief executive, said: “This business plan will drive improvements to the services we provide to our customers, maintain high levels of investment, offer even better value for money and a lower water bill.

“Despite cutting bills further, we’ve not cut investment or lost any of the benefits of our original plan. As a company without shareholders, our unique model in the utility industry ensures that all gains go to customers and the reduction in the bill has been achieved through some changes to the way in which we finance the Plan, including a lower cost of capital.”

Having opted to resubmit its business plan early, Welsh Water will receive a draft determination in June.