Water companies could be given powers to impose higher household charges during droughts under plans being considered by Ofwat, shifting more of the financial burden of Britain’s water shortages on to consumers.
The regulator is examining seasonal and usage-based pricing structures designed to encourage households to reduce consumption when supplies become scarce. Most schemes would require homes to have smart water meters and could come into effect from April if approved.
The proposals are likely to prove politically explosive as water companies face mounting criticism over bills, sewage discharges, infrastructure failures and heavy debt burdens.
Under a seasonal pricing model, customers could pay less during winter before facing higher charges during the summer, when demand typically rises. A separate “rising block” tariff would charge a basic rate for essential consumption before progressively increasing the price as household usage passes defined thresholds.
Ofwat has not proposed a nationwide surge-pricing regime. Its consultation found that water companies regarded existing regulations as an obstacle to introducing more flexible charges.
Critics argue the approach risks making households pay for failures elsewhere in the system.
Feargal Sharkey, the water campaigner and former Undertones singer, said suppliers were effectively penalising customers for shortcomings that had persisted for decades.
“For 40 years, these companies have had legal obligations to help consumers to reduce their demand and they have failed at that comprehensively,” he said, pointing to failures over water demand, river pollution and sewage.
The controversy comes as ministers simultaneously allow water companies to raise bills to finance infrastructure investment. Five suppliers were given permission this week to increase charges to support network upgrades through the end of the decade.
Thames Water, Britain’s most indebted water company, is among them, despite continuing scrutiny over its finances and calls for it to be placed into special administration.
Prime Minister Andy Burnham warned companies against treating households as a “blank cheque”.
“Where water companies seek to pass unnecessary costs on to households, they will be challenged,” he said, promising reforms designed to keep bills as low as possible.
Ofwat defended the proposals as a way to make scarcity and efficiency more important in pricing decisions.
The fundamental problem is increasingly difficult to disguise: Britain is asking households to conserve water while simultaneously asking them to pay more for an industry that has spent years struggling to invest adequately in the infrastructure needed to manage supply.
If drought pricing arrives, customers may reasonably ask whether they are being charged for scarcity — or for the industry’s failure to prepare for it.
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