In a response to Environment Secretary, Owen Paterson’s letter to water companies asking for them to ensure customers get a fair deal, the financial services company said the level of government scrutiny was unwarranted.
In its report, Deutsche Bank said the affordability of rising energy bills had attracted intense debate but water bills had risen at a much slower pace.
Deutsche Bank said: “The water sector has managed to keep a lower profile, partly because bills have risen much more slowly (closer to inflation, compared to c.10% increases announced recently for energy), and with water bills a smaller part of household disposable income (c.1.5% compared to c.4% for energy).
“However, the water sector appears to be attracting slightly more attention from government.”
According to the report, the lasting impact on the sector will depend on the outcome of the 2014 price review, and if affordability of utility bills remained a prominent political concern through 2014 Ofwat could deliver a tough review.
“It may also be more likely to deliver up front price cuts for customers rather than allow for a more phased approach,” the report said.
Deutsche Bank said it retained “a neutral view on the sector”.