Ofwat has warned that companies not adhering to new connections charge guidelines must offer “compelling evidence” to justify any extra costs.
The message was issued as Southern Water was ordered to pay back £5,863 to Exel Construction, after Ofwat decided the water firm had failed to justify the administrative costs.
A spokesperson for the regulator said: “Where there are concerns that a company’s charges for new connections do not comply with the charging rules we have set out, we will have powers to take enforcement action by issuing enforceable directions (which might, for example, require water companies to change their charges).”
The regulator has issued new guidelines calling for more transparent pricing structures and insisting that companies to set out their charges — or charging methodologies — upfront.
“If a water company believes that a higher charge is justified, it must set out compelling evidence to demonstrate what administration activities it is carrying out, the costs that it incurred in providing the activities and the reasons these activities were necessary in order to provide the customer with the new connection,” said Ofwat in a report on the Southern Water case.
Responding to the regulator’s order, Southern Water said it is “currently reviewing [its] charges in line with [regulation changes], and these will be consulted on in the near future”.