Anglian forced to cut water bills

Anglian Water received a slap in the face from the industry regulator yesterday when Ofwat ruled that, far from increasing prices next year, it may be forced to cut them for its five million customers.

The supplier, part of the AWG group, had applied for permission to raise bills from next April to cover higher construction and environmental costs and increased levels of bad debts.

But Ofwat said customers may instead be entitled to a price reduction because Anglian had not spent the amount of money originally envisaged on sludge disposal and combating the cryptosporidium bug which causes poisoning.

Rather than the 1-2 per cent increase in charges Anglian had envisaged, the regulator said they should come down by 2.4 per cent in real terms, reducing the average domestic bill to £279 compared with the £285 assumed when water prices were set in 1999.

Philip Fletcher, director general of water services, said: "Taking into account the funding the company received for work no longer required, as well as their extra costs, we believe customers should, in fact, benefit from lower bills."

An AWG spokesman said it was disappointed at Ofwat's draft determination and would be seeking to change the regulator's mind before a final decision was taken in December. AWG shares closed down nearly 5 per cent at 515p.