Ofwat has just published its draft determination outlining major cuts in some water companies’ spending plans, and calling for cuts in customers’ bills.

The regulator has sanctioned £21B investment in the industry.

Its prosposals include cutting Thames Water’s planned £5.5B spend to £4.6B over the next five years.

Ofwat has also nearly halved the company’s proposed water mains replacement programme that, according to Thames Water, will result in no leakage reduction over the next five years.

Commenting on the proposed spending cut, Thames Water chief executive David Owens said: “We’ve spent the past two years preparing our plan.

We know what our region better than anyone else and our proposals are based on sound evidence and, most importantly, what customers say they want. We’re not prepared to cut corners on essential work – but we’re not gold-plating either.

While acknowledging there is while to go before the final plans are approved later this year, Owens warned that “initial indications suggest today’s draft determination may not allow us to deliver what our customers want in the future.”

Dwy Cymru Welsh Water said it is studying in detail Ofwat’s reduced £1.1B investment plan before responding.

However, the company’s finance director, Chris Jones, welcomed “any proposal that reduces bills for customers”.

He added: “We also need to ensure that we have enough money to deliver essential services for our customers and fund the capital investment improvements to our water and sewerage networks.”

Ofwat is proposing that Severn Trent Water follows a £2.2B AMP5 capital investment programme.

Severn Trent wanted £2.6B “to reinforce our water supply network, reduce sewer flooding and improve our local water environment, all within a proposed annual bill increase averaging 0.8% (in real terms) for the five years”.

The water companies have until September in which to respond to the draft determination. Ofwat’s final decision is due in November.

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