Water companies to share cost of bad debt with business customers
The water regulator will permit water suppliers to raise prices for businesses and other non-household customers from next year, in a bid to offset the costs of higher amounts of bad debt amid the Covid-19 pandemic.
From next April, non-household customers will bear three-quarters of the costs of bad debt where those costs are more than 2% of non-household revenue, Ofwat said on Monday, with the water companies themselves shelling out for the remaining quarter.
Ofwat added that the price cap allowances would be implemented for at least two years.
“These decisions aim to protect the interests of non-household customers in the short and longer term, as the business retail market continues to feel the impacts of Covid-19,” said Ofwat’s business retail director Georgina Mills.
The privatised water companies of England and Wales have been faced with a sharp drop in demand from non-residential customers since the pandemic erupted, as home working and furlough kept many people away from commercial premises.
All three of the major listed water utilities - Pennon Group, Severn Trent and United Utilities - were in the red on Monday afternoon, following the announcement.