A reminder to water firms

There was the ring of familiarity, therefore, to Jonson Cox’s speech yesterday when the Ofwat chairman warned the water companies that their customers’ interests are just as important as those of their shareholders, mentioning Yorkshire Water, among others, as an example of a company that has perhaps been over-generous with its shareholder rewards.

At a time when more and more consumers are struggling to afford their energy bills, the last thing they need is steadily rising water bills as well. It is a fact, however, that every water company in Britain has increased the average bill for unmetered households faster than the rate of inflation over the past 10 years, according to Ofwat’s own figures.

And, of course, unlike other utilities, a water company’s customers are held captive, unable to switch to a competitor no matter how unhappy they are with the service they receive.

No matter how tough Mr Cox tries to get in regulating the companies, it is always going to be tempting for them to take advantage of this, to view their profits as far more important than customer satisfaction as a mark of success and accordingly to reward their executives and shareholders with large bonus payments.

In reminding them of their responsibilities to their customers, then, Mr Cox – a former chief executive of Yorkshire Water – is sounding a timely warning. Profits and earnings might be on the up and up for the water companies, but for their customers it is a very different picture.

At a time when household incomes are decreasing, it is crucial that water companies do not take their customers for granted simply because they have nowhere else to go. Mr Cox is understandably in favour of less heavy-handed regulation, but he must be prepared to act should his industry choose to ignore yesterday’s friendly warning.