Water regulator accused of letting companies rinse everyone for £800m
Water, eh? Can't live without it, but still have to pay for it. But how much? Well, thanks to the regulator of water companies - OFWAT - far too much, it seems. In fact, they've been accused of letting companies rinse us all to the tune of £800m.
The National Audit Office (NAO) said OFWAT's price capping between 2010 and 2015 meant that water providers in England and Wales has been able to make full use of low borrowing charges and tax cuts, which pocketed them £840m from lower than predicted interest rates, and a further £410m from reduced corporation tax rates.
Must be nice, eh? The audit office reckon that the combined water companies were left with £800m after everything, and of course, OFWAT didn't see to it that we all got value for money through price caps, because they set them in advance, and seemingly set them in favour of firms.
Cathryn Ross, OFWAT's chief executive, said: "The gains were largely as a result of unexpectedly low borrowing costs following the severe global financial crash, high inflation and changes in tax rates during the 2010 to 2012 period. In looking at this the NAO also however acknowledge that the way OFWAT balanced risk between companies and customers shielded customers from increased financial risk which could have led to significant bill increases had rates increased."
"I stand by this approach, because it protected customers from a risk that we did not think they should bear and provided certainty about the cost of their water bills."
Obviously, the water companies themselves haven't done anything wrong, but questions have to be asked of the watchdog here.
Head of the NAO, Amyas Morse, warned: "OFWAT made significant improvements in 2014, but its price cap regime is not yet achieving the value for money that it should."
Anyone think they might pass on some savings in the next financial year? What do you mean 'no'?