Trialling different household charges

In April 2023, the water industry regulator Ofwat changed the rules on how water companies charge household customers for their use of water. This was to allow them to carry out trial schemes where – for an agreed period of time – a specific group of customers could be charged in a different way to others supplied by that company.

The idea was to make it easier for companies to explore how different ways of structuring charges might better encourage the efficient use of water and/or help make bills more affordable for some customers struggling to pay.

We support this approach and believe that the schemes can be useful in informing how water companies charge for services in the future.

The way charges are regulated means companies cannot collect more money overall from their customers. But it could result in some individual customers paying more than they did previously, while others could pay less during the trial.

Companies must consult with CCW in developing each scheme. We make sure the company puts in place appropriate safeguards to ensure customers in vulnerable circumstances are adequately protected or excluded from the trials.

Tariff Trials currently underway or planned

The WaterSave tariff trial was introduced on 1 October 2023 and will run for 2 years. The objective is to explore how changing charges for water could be fairer, more affordable and encourage customers to use water more wisely.

The trial involves a group of around 1,500 Affinity Water customers in the SG1 postcode area.

The WaterSave Tariff is based on a rising charge for set amounts of water – called blocks. A different price applies to the first, middle and end blocks of water consumption.

  • Block 1: the first 30,000 litres of water per year will be free.
  • Block 2: the next 215,000 litres of water per year will be charged at £1.51 per 1,000 litres.
  • Block 3: each 1,000 litres of water used over 245,000 litres per year will be charged at £4.00 per 1,000 litres.

A fixed/standing charge of £12 per year will apply to all.

The company expects 2 out of 3 customers in the trial will pay less than previously but very high users will pay more.

Protections

Customers supported through the following schemes due to high essential water usage and/or low income have been excluded from the trial:

• Low Income Fixed Tariff (LIFT) customers
• WaterSure customers

Anglian Water will trial a seasonal tariff for two years from April 2024. The aim is to test how the tariff might help encourage more efficient use of water during summer when demand on water supplies is usually higher.

Approximately 14,000 customers in Lincoln and Norwich will be involved in the trial. The water use tariff for these customers will be set at higher levels during summer and lower levels at other times of the year.

The company expects that those customers who maintain high summer usage levels could pay around £18 more per annum for water services. Overall it is expected that two thirds of customers in the trial will pay around the same or less than on standard tariffs.

The following customers are excluded from the trial:

  • Those on the Priority Services Register (PSR) with medical needs
  • Those on social tariffs/ reduced charges schemes (Watersure, Aquacare Plus or LITE)
  • Anyone moving into a property previously subject to the trial

The company plans to commence a trial of a a water-saving tariff from 2024, alongside its smart metering programme, rewarding customers who reduce their consumption.

The company is considering a range of options for a tariff trial.

The company is considering extending its social tariff (which supports lower income customers) to a wider group of customers with a discount applied to water use up to a certain level of usage.

Smart Saver tariff

South West Water will be launching the first of its planned tariff trials in April 2024. 500 households in Barnstaple will be included in the rising block trial which will run for two years.

Charging bands will be as follows:

  • Essential (up to 46m3) £1.66 per m3 (1000 litres)
  • Standard (47-135m3) £2.07 per m3 (1000 litres)
  • Premium (>136m3) £7.32 per m3 (1000 litres)

The company expects 89% of customers will pay the same or less under the tariff trial.

Protections

The company will consider representations from customers with valid reasons for being excluded from the trial, ahead of it launching. WaterSure, social tariff and high use PSR customers have been automatically excluded.