Ofwat, the water industry regulator, is to report that the country’s water companies have benefited from cheaper borrowing and should be compelled to pass on these savings to their customers in the form of reduced bills and tariffs.

United Utilities (UU), the Merseyside water supplier, will be amongst those water companies to be told by Ofwat to cut their bills.

Ofwat chairman Jonson Cox is to say that after paying close attention to the cost of borrowing, the regulator now believes that water firms can borrow money more cheaply thanks to extremely low interest rates.

UU, based in Warrington, has already committed to cutting consumer bills by 4.1% before 2020, following the publication of its half-year results in November 2014. Customers are also set to benefit from blow inflation growth in average household bills for the rest of the decade.

Despite this, the Consumer Council for Water (CCW), representatives of customer interests, have noted that inflation (which Ofwat allows for water companies to add to bills) would mean that prices would still rise for consumers, in some cases by as much as £30.

The average household water and sewerage bill stands at £400 per year, having risen by more than 60% over the last 10 years.

Head of the CCW, Tony Smith, said that Ofwat should do more to reduce bills even further, attacking water firms for making undue profits from unexpectedly low debt costs and water prices that were fixed at greater than the rate of inflation over the past five years.

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Words: Peter Cribley