Ofwat: Innovative charging needed to tackle water poverty

Ofwat has urged water companies to develop innovative charging structures for customer bills to better help households struggling to pay and encourage demand reduction through savings.

Emily Bulman, director of charges and customer policy at Ofwat, said companies should be devising plans now to develop into trials supported by the regulator.

“We’re asking the sector [to think of what more] can be done with charges to support customers,” she said “This is wider than social tariffs, because the group that could benefit might be a lot bigger than those benefitting from social tariffs.”

She praised the sector’s work to reach more households that need financial assistance, which is resulting in an increase in the uptake of billpayers seeking support.

Bulman said over the past year there has been a 50% increase in the amount of help given, which she said highlights the increasing awareness and ease of access. It also reflects the cost of living crisis pressures facing families. Waterwise figures suggested 1.5 million households are now in water poverty.

She added water companies “are in the driving seat” for developing innovative charging approaches, which Ofwat will ensure it facilitates and removes potential regulatory barriers for companies to step up with trials ahead of the next price review. She added: “We are looking for companies to show ambition in business plans for innovative charges.”

Ofwat has consulted on companies trialling new charging schemes to understand what good practice trials would look like. Conclusions to the consultation and next steps are expected to be published this month as the sector writes its business plans for 2025-30.

Bulman said the regulator was also examining ways developers can be incentivised to include water efficient features in new build homes. She said a working group led by Southern together with Anglian, Thames and United Utilities was developing best practice for incentivising developers.

At present most water companies offer discounts to developers to make homes more efficient, which is something Ofwat wants to see more of and will consult this year on.

Speaking at the Waterwise annual conference, Bulman together with panellists from CCW, National Energy Action and Consumer Scotland, noted the significance the energy crisis could have on household habits.

Jess Cook, water poverty lead at the NEA said: “We have people more engaged now on home energy use than ever before,” so spreading the message that using less hot water will cut energy bills should be communicated to customers through creative channels to ensure it reaches billpayers.