Water bills in Wales set to rise significantly over next decade

Water bills in Wales are set to rise significantly over the next decade, affecting customers of both Dŵr Cymru Welsh Water and Hafren Dyfrdwy.

According to Ofwat, the economic regulator for water companies in Wales and England, the average annual bill for Dŵr Cymru customers will increase by around £27.40 per year, culminating in a £137 rise by 2029-30.

This will see annual bills jump from £466 to £603, a 29% increase. Meanwhile, Hafren Dyfrdwy customers will experience a rise of £26.50 annually, totalling £127.88 by 2029-30, with bills increasing from £396 to £524, a 32% hike.

These rises are part of Ofwat’s draft determination of water company plans for 2025-2030, aiming to futureproof water supplies, protect waterways from discharges, and upgrade outdated infrastructure.

The funding for these ambitious plans will be partly sourced from increased water and sewerage bills.

What is Ofwat? Ofwat, or the Water Services Regulation Authority, is an independent regulator for water companies in Wales and England, operating within a policy framework set by UK and Welsh Ministers. Its duties include ensuring good quality services, financial viability of water companies, and promoting efficiency. It also supports sustainable development and competition where beneficial.

Ofwat’s Priorities for Wales The Welsh Government’s Strategic Policy Statement, published in July 2022, outlines five key priorities for Ofwat: addressing climate and nature emergencies, enhancing the environment, improving resilience, maintaining asset health, and focusing on customers and communities.

Setting Future Charges Every five years, water companies submit their plans, including proposed charges and service improvements, through the price review process. Given that most water companies operate as monopolies, Ofwat sets price limits and minimum performance standards. The plans for 2025-2030, known as AMP8, were submitted in October 2023 and scrutinized by Ofwat to balance affordability with necessary investments.

Dŵr Cymru’s Plans Dŵr Cymru’s draft PR24 business plan includes:

• A £3.5 billion capital investment programme
• £1.9 billion for wastewater investment
• Targeting a return to 4-star Environmental Performance Assessment
• Measures to prevent 186 priority Storm Overflows
• Cutting pollution incidents by over 13%
• Reducing leakage by 10%
• Improving tap water quality by 43%
• Extending social tariffs for low-income customers

These plans will result in an average bill increase of 26%. Following Ofwat’s review, Dŵr Cymru’s allowed expenditure was adjusted to £5.2 billion, with average bills set to rise to £603 by 2030.

Hafren Dyfrdwy’s Plans Hafren Dyfrdwy aims to:

• Reduce leakage by 10%
• Cut supply interruptions by 72%
• Upgrade 24% of properties with smart meters
• Reduce emissions from water assets by 15%
• Achieve zero serious pollution incidents

Their revised plan, with an allowed expenditure of £226 million, will see average bills reach £524 by 2030.

Next Steps Ofwat is consulting on these draft determinations, with feedback open until 28 August 2024. A ‘Your water, your say’ meeting on 24 July will gather customer and stakeholder views. Final determinations will be published on 19 December 2024.

Customers in Wales should prepare for these increases, reflecting significant investments to secure and improve water services and environmental standards.