United Kingdom

Water companies refer their regulator to competition watchdog in revolt against price controls

Water companies have referred their regulator to the competition watchdog in a revolt against strict price controls.

In December, Ofwat ordered firms to cut annual bills for customers by £50 on average over five years, while spending £51 billion on improving services and investment in infrastructure.

The crackdown followed an outcry over bumper dividends paid to shareholders, tax avoidance and the poor record of some firms in preventing leaks.

Drip effect: Anglian Water and Northumbrian Water have joined Yorkshire Water in referring Ofwat to the Competition & Markets Authority

It has sparked the largest revolt in the 30-year history of the privatised water industry.

Yesterday Anglian Water and Northumbrian Water joined Yorkshire Water in referring Ofwat to the Competition & Markets Authority.

Anglian has been ordered by Ofwat to slash annual bills by 10 per cent. But the company said the price controls will jeopardise its plans to spend almost £6.5 billion over the next five years, rather than offer big cuts in bills. Much of this money has already been earmarked for projects including installing 1.1m smart meters, and fixing leaky pipes. It said the crackdown, which will knock more than £500m from its annual income, will also jeopardise its plans to lay a 300-mile pipeline from the Humber to provide water to Essex.

Chief executive Peter Simpson said: 'The Anglian region faces specific challenges brought about by a changing climate and a population growing faster than almost anywhere else in the UK. Our plan aimed to address these challenges.'

A spokesman said Anglian has not paid a dividend for the past two years and has agreed not to pay one for the next five years as part of its investment plans.

But the UK's biggest water supplier, Thames Water, said it had accepted Ofwat's price curbs, despite giving serious thought to joining the rebellion.

Ofwat chief executive Rachel Fletcher said: 'Companies must become more efficient, and step up to deliver better services [and] lower bills.'