Last month, Ofwat released a report highlighting the challenges facing the sector and the need for new, innovative ways to deliver sustainable water. It also looked at the need for flexibility in company licences “since it is one of the key tools of regulation”.

“The flexibility would allow us to set segmental price controls and targeted incentives to achieve better outcomes, for example, retail choice for business; better allocation of treated water resources; and different approaches to sludge treatment” said Ofwat.

In response to the proposals many companies in the sector have written to the water and sewerage regulator to challenge the proposals.

Companies such as United Utilities and Severn Trent have called for the proposals to be reviewed and further consulted on by the sector.

Water industry body, Water Uk, said: “Companies have considered these proposals carefully. Companies want to maintain investor confidence and the low cost of financing that the sector enjoys, which keeps customers’ bills as low as possible – an objective which is shared by the Government.

“The majority of companies have been unable to accept Ofwat’s proposals in their current form due to widespread concern within the industry about their potential impact on investor confidence”, it added.

Leigh Stringer

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