UK water firms can raise prices temporarily to offset Covid costs

The UK’s water regulator is to allow utility companies to increase prices temporarily starting next year to offset higher bad debt costs because of the Covid-19 pandemic.

Water companies from April will bear 25% of bad debt costs where these are more than 2% of non-household revenue, and non-household customers will bear the rest, the Water Services Regulation Authority (Ofwat) said in a statement.

The regulator added that the adjustments to price caps would apply for a minimum of two years.

Utilities have been struggling with a sharp drop in water consumption by businesses as virus restrictions have moved people out of office buildings and into remote working, while defaults have also been rising.

The largest water companies in the UK include Thames Water, United Utilities, Severn Trent and the South West Water owner, Pennon.

“These decisions aim to protect the interests of non-household customers in the short and longer term … as the business retail market continues to feel the impacts of Covid-19,” said Georgina Mills, Ofwat’s business retail market director.

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