How our charges are set

Every five years, the water industry regulator, Ofwat, runs a process (known as a price review) to determine the amount that can be collected from customers through bills.

Process to set charges

This is how the process works.

1. We prepare a business plan

For each five-year period, we prepare a business plan which sets out our proposed commitments, investments and how much this will cost.

Our customers play a very important part in creating our business plan. We consult with them at length and take their views into account.

2. Ofwat reviews our business plan

Ofwat reviews our business plan to decide the appropriate amount we can collect from customers over the five-year period to deliver all our commitments.

In December 2024, Ofwat issued its decision for the 2025-2030 period. This puts a limit on the total amount we can collect from customers each year.

3. Charges are agreed

We then set our charges in accordance with the limit that Ofwat sets.

We sometimes need to change individual charges by different amounts so that charges continue to reflect the cost of our services. This means that unmetered charges can increase by less or more than metered charges.

The change in bills will also depend on the service you receive from us (eg, water, wastewater or both) and how much water you use (if your property is metered) or the rateable value of your property (if it is unmetered).

4. Charges are updated every year

We update our charges annually to ensure we are collecting the correct revenue from customers in each year, as well as adjusting for the impact of inflation.

We do this according to a price formula that is set by Ofwat. This formula uses the November rate for inflation to set prices for the following year. The water industry uses the Consumer Price Index including Housing Costs (CPIH) as the measure for inflation.

Charges are applicable from 1 April every year and are published by 1 February.

5. Overpayments are returned to customers

Since 2015, Ofwat has said that if we receive more from customers’ bills than we had expected (for example, due to faster population growth), we must return that extra amount to customers through slightly lower bills than we had planned the following year.

Also, where we fail to meet our commitments to the services we offer, we return money to customers through lower bills. Similarly, where we’ve exceeded these commitments, we are rewarded.