Water companies should be given powers to introduce compulsory metering but subject to tougher targets to cut leaks, MPs have recommended.

A report on water regulation, published today (9 October) by the House of Commons Environment, Food and Rural Affairs (EFRA) select committee, backs the National Infrastructure Commission’s recent recommendation that water companies should be allowed to implement compulsory metering, using smart devices.

It says that allowing compulsory metering only in water-stressed areas is “inappropriate” given the nationwide need to conserve water.

But the report, which follows an inquiry by the committee, recommends support should be strengthened for economically vulnerable customers should they face significant bill increases once a meter is installed.

The MPs also urge setting utilities tougher targets to cut what they describe as the “shocking” amount of water lost daily through leakage.  The existing target to cut leaks in half by 2050 should be brought forward by 10 years to 2040.

And the report recommends that the government and Ofwat should set a long-term target for water transfers between regions, expressing concern that existing incentives in the regulator’s PR19 framework are insufficiently robust to incentivise water companies to do so.

The committee also says Ofwat should carry out a review of how the complaints process within water companies, which it describes as “unnecessarily convoluted” in some cases, could be streamlined.

This could include introducing a mechanism whereby water companies either automatically pay complainants a fixed sum or escalate complaints to the Consumer Council for Water if the gripe is not resolved by the company within 15 days.

The MPs say they are “not satisfied” with Ofwat’s explanations for why it did not firmly tackle much earlier the imbalances in some water companies’ financial models, criticising the balance for being skewed in favour of shareholders rather than consumers.

And they express scepticism about whether the regulator’s proposals to rebalance the sector go far enough, while acknowledging that they are heading in the right direction.

On the opening up of the business market to competition, the report urges Ofwat to consider ways to incentivise water SMEs to switch suppliers.

Responding to the select committee’s report, Water UK chief executive Michael Roberts, said: “Leakage is a big priority for the industry. But we also know there is more to do, which is why water companies have proposed the most ambitious leakage reduction programme in 20 years and are looking ahead to even further long -term reductions.

“The committee rightly highlights that we all need to use water wisely. Continued rollout of metering is an important tool for managing demand, but how and when it is done needs to be handled carefully as part of a wider approach reflecting the needs of different customers.”

A spokesperson for the NIC welcomed the select committee’s backing for its recommendation on metering. “A long-term target will unlock new technologies which, in turn, will reduce the costs and the potential impacts on customers’ bills.”

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