Water Companies Facing Legal Challenge Over Double Billing
A legal challenge is set to unfold as campaigners argue that water companies are being allowed to charge customers twice for infrastructure improvements aimed at reducing sewage pollution. The case, brought by River Action, will be heard in court on Tuesday and Wednesday, with the central claim being that Ofwat, the regulatory body overseeing water companies in England, is enabling an unlawful financial burden on consumers.
The issue centers around a £104bn investment plan approved by Ofwat under its PR24 decision, which is designed to address years of underinvestment in water infrastructure. This funding is intended to reduce sewage pollution and bring water companies into compliance with environmental regulations. However, critics argue that this process is leading to double billing for customers, who are already paying for previous investments that should have been sufficient to meet current standards.
Customers Facing Significant Bill Increases
Customers of several water companies are experiencing dramatic increases in their bills, with some facing hikes of over 50%. For example, Thames Water customers are seeing their average annual bill rise from £436 to £588—a 35% increase. Southern Water customers are paying 53% more, raising their average from £420 to £642. Meanwhile, United Utilities is increasing bills by 32%, bringing the average to £535 per year.
These increases have sparked concerns among consumer advocates, who argue that such large surges in costs are not justified, especially when they are tied to investments that should have been funded through previous charges. According to River Action, these bill rises are essentially forcing customers to pay for past failures of water companies, rather than just for new infrastructure projects.
Case of Windermere as a Key Example
The case of Windermere has been highlighted as a critical example of how customers may be unfairly charged. Lawyers for River Action argue that any investment required to fix historic underinvestment in infrastructure should be covered by shareholders, not by consumers. Under Ofwat’s rules, customers are only supposed to pay for new infrastructure, not for investments that bring companies into compliance with existing environmental laws.
Emma Dearnaley, head of legal at River Action, emphasized that it is fundamentally unfair for the public to bear the cost of water companies’ past failures. “Customers should not be made to pay twice for water companies’ past failures to invest in improvements to stop sewage pollution,” she said. “But River Action is concerned that Ofwat’s approach means customers could be paying again. Meanwhile, degraded infrastructure keeps spewing pollution into rivers and lakes across the country that should have been clean decades ago.”
Legal Arguments and Concerns
The case argues that Ofwat must ensure that the billions it approves for investment result in legal compliance by water companies and that customers are charged fairly moving forward. Ricardo Gama, a lawyer representing River Action at the hearing in Manchester, stated that the firm believes Ofwat has failed to ensure that water bills are used for infrastructure upgrades.
“Our client believes that this case shows that Ofwat has failed to make sure that water bills are used for infrastructure upgrades,” he said. “River Action will argue that the money that could and should have been used to make essential infrastructure improvements is now gone, and customers are being asked to foot the bill for those improvements a second time over.”
Ofwat's Response
Ofwat has rejected the claims made by River Action, stating that the PR24 process carefully reviewed business plans to ensure customers receive fair value and that the investment was justified. A spokesperson for Ofwat said: “We reject River Action’s claims. The PR24 process carefully scrutinised business plans to ensure that customers were getting fair value and investment was justified. We stated that customers should not pay twice for companies to regain compliance with environmental permits, and have included appropriate safeguards in our PR24 determinations to monitor this, which we will monitor closely, taking action if required.”
The hearing is expected to shed further light on the complex relationship between water companies, regulators, and consumers, and whether the current system truly protects the interests of households across England.
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