Bristol Water today rejected industry watchdog Ofwat’s latest price ruling, which would have forced it to slash its bills, and said it is seeking a review by the Competition and Markets Authority (CMA).
Ofwat’s ‘final price determination’ for water companies announced last December proposed a 23% reduction in household bills over the five year period for Bristol Water – one of the largest cuts of any UK water firm. 
At the time Bristol Water argued the move would make it difficult to deliver promised improvements to its service or make sufficient investment.
Ofwat set the allowed level of total wholesale expenditure for Bristol Water at £409m and reduced the average household bill from £197 to £162 in the first year followed by four years of £152 - a 23% reduction based the 2012/13 prices.
Bristol Water’s business plan for 2015 to 2020 had proposed wholesale expenditure of £541m and a reduction in average household bills of 4.5%, or £9 in real terms, to £188.
It is the second time in less than a year that Bristol Water and Ofwat have gone head to head over charges.
Bristol Water chief executive Luis Garcia said: “The Final Determination makes it very difficult for us maintain our levels of service and make sufficient investment to deliver the enhancements needed to improve and protect the water supply that our customers told us they wanted, for now and in the future,” said
“Throughout this process we have engaged fully with Ofwat and we have consulted with our customers to ensure that their views and priorities have shaped our Business Plan. We are very confident that our proposals for 2015-2020, combining service improvements and price reductions, meet our customers’ requirements and expectations.
“We do not believe that the determination Ofwat has set is in the long term interest of our customers and stakeholders and we believe that a review by the CMA will result in a better outcome. There is clearly a discrepancy in calculations because of the size of the gap and the CMA is the only fair way to resolve this.”
Bristol Water is owned by Canadian utility giant Capstone Infrastructure Corporation (50%), Spanish water firm Sociedad General de Aguas de Barcelona S.A. (Agbar) (30%) and conglomerate Itochu Corporation of Japan (20%).
It had a turnover of £114m in 2012-13. Its average water bill in 2014-15 is £202.
The firm supplies water to around 1.2m people and businesses in an area from Thornbury and Tetbury in the north to Street and Glastonbury in the south, and from Weston-super-Mare in the west to Frome in the east.
Ofwat’s final determination, published on December 12, set the allowed levels of total expenditure and investment companies can make to improve and protect water supplies. It also set the price controls which apply to companies’ retail and wholesale activities and which determine the level of customers’ bills over the next five years.
The CMA, formed as a merger of the Competition Commission and the Office of Fair Trading, will appoint a panel of members to adjudicate this case.
Bristol Water will then submit a statement of case to the panel which will be reviewed along with responses from Ofwat as well as statements from industry and regulatory stakeholders. The process is expected to last six months.
A number of water companies, including Anglian Water and United Utilities, have accepted their price determination. The deadline to accept or reject them is February 12.
Bristol Water and Ofwat have gone head to head in the past over charges.
Last year Ofwat rejected a request by Bristol Water to enter into mediation on its planned expenditure over the next five years on wholesale water costs.
