Key facts
- Water companies in England and Wales may be allowed to raise bills during droughts under Ofwat proposals.
- The proposals aim to reduce water consumption by factoring in 'water scarcity'.
- This approach is being compared to surge pricing used by taxi firms.
- Several water companies are already conducting trials of new charging structures.
- Consumer advocates emphasize that any new tariffs must be fair and protect struggling customers.
Water companies in England and Wales are exploring the possibility of implementing 'surge pricing' for water bills during periods of drought. The proposals, being considered by the sector's regulator Ofwat, would allow suppliers to adjust charges based on water scarcity to encourage reduced consumption. This initiative comes amidst significant public dissatisfaction with water companies, fueled by rising bills, environmental concerns like sewage discharge into waterways, increased executive pay, and substantial dividend payouts to shareholders.
Several water companies have already begun trials of innovative charging structures. South West Water is testing a 'rising block tariff' where customers are charged progressively higher rates for increased water usage, with the company assessing that 90% of its customers would see lower bills under this trial. Anglian Water and South West Water are also experimenting with charging more for water used during summer months compared to winter. These trials aim to make bills more affordable and reduce overall demand.
While the government has stated it has no plans for nationwide surge pricing, a spokesperson indicated support for new charging structures that are fairer, more affordable, and promote water efficiency. Consumer advocates, like the Consumer Council for Water, support exploring new tariff models but emphasize the need for fairness and protection for customers already facing rising costs. They note that current trials are not designed to generate additional revenue and many are structured to lower overall bills for most customers. The industry trade association, Water UK, suggests rewarding customers for water savings through their bills, potentially by eliminating standing charges or expanding discounts.