The ruling by Ofwat, announced today, means the average annual bill for Yorkshire Water’s five million customers will drop from £373 per year to the equivalent of £361 by 2019-20.
But actual bills dropping through customers’ letterboxes in five years’ time in the region will be higher, because they will add in the rate of Retail Price Index (RPI) inflation.
This currently stands at 2.3 per cent, higher than the benchmark Consumer Price Index (CPI) measure and well above pay growth at one per cent - fuelling fears that, despite being held back, water bill rises could still see customers struggling to pay.
Ofwat said the decision - which confirms a provisional determination in August - would see national average bills for water and sewerage services in England and Wales fall from £396 to £376.
Yorkshire Water’s bills will be lower than the national average thanks to the three per cent cut imposed by Ofwat, though the utility firm last year requested that bills should only drop by one per cent.
Ofwat also rejected a request by Britain’s biggest water company, Thames Water, to increase household charges by three per cent between 2015 and 2020 to help pay for the £4.2 billion Thames Tideway Tunnel.
It also said utility firms must improve efforts to tackle water leakage, supply interruptions, sewerage water flooding of properties and see cleaner water at beaches.
Yorkshire Water will invest more than £3.8 billion in the region’s water and sewerage services, it announced yesterday after its five year business plan was scrutinised by the regulator.
This includes £180 million to improve the quality of inland waterways and £1.3 billion to maintain the company’s network of treatment works, pumping stations, sewers and pipes
Chief Executive Richard Flint said: “When pulling together our plan, more than 30,000 customers gave us their views on what they thought we should be investing in. Our consultation programme was the biggest of all the water and sewerage companies, so we’re confident that it represents real value for money for our customers.”
Ofwat chief executive Cathryn Ross said water bills nationally would go down by five per cent in the next five years and that service would improve, meaning customers will “get more and pay less”. She said: “Where companies stepped up to do the best they could for their customers we did not need to intervene, but where companies fell short we stepped in to make sure customers get a good deal. Now the hard work begins.
New charges come into effect in April 2015. Companies have two months to accept the decision or seek a referral to the Competition and Markets Authority.
Labour’s Maria Eagle said the decision meant that for many people bills would still be rising faster than wages.