Five major UK water companies — Anglian Water, Northumbrian Water, South East Water, Wessex Water and Southern Water — have asked Ofwat to refer its PR24 Final Determination to the Competition and Markets Authority (CMA) for review. The companies argue that the regulator's decisions do not adequately support necessary investments and improvements.
Anglian Water has announced its decision to seek a referral to the CMA, expressing concerns that Ofwat's final determination does not sufficiently account for the company's investment needs to ensure resilient and sustainable water services. “In the present Final Determination, the overall risks are not balanced, such as the underfunding for asset maintenance, which puts long-term investment and resilience at risk,” said Anglian Water’s Chief Executive Mark Thurston.
Anglian Water is the largest water and water recycling company in England and Wales by geographic area, serving more than seven million customers, and its PR24 Business Plan was one of the largest infrastructure proposals in the sector, totaling £11.2bn.
Similarly, South East Water has announced it requested a referral of its final determination to the CMA. The company contends that the regulatory constraints imposed by Ofwat could hinder its ability to secure future water supplies and meet the demands of a growing population.
South East Water’s PR24 Business Plan proposed a £1.9 billion investment over five years to enhance customer service, reduce supply interruptions, and improve network resilience. The company’s Board believes that Ofwat’s response “does not address our company specific circumstances and external challenges, such as concerns over water security for our customers and climate change resilience.”
Southern Water has also confirmed its intention to appeal Ofwat's final determination, stating that the current financial provisions are insufficient to support its plans for enhancing service quality and environmental performance. “The Final Determination would not enable us to deliver the environmental and performance improvements and new infrastructure that our customers and communities rightly expect,” said Southern Water CEO Lawrence Gosden.
The company said it is challenging the determination in the best interest of customers and the environment, arguing that the funding does not align with the scale of transformation required. In addition, Southern Water announced its intention to raise £900 million in new equity to support ongoing investment in improvements and new infrastructure.
Wessex Water has also asked the Competition and Markets Authority (CMA) to review its investment plan for vital water and sewerage upgrades over the next five years. The company says the £4.2 billion approved by regulator Ofwat is insufficient to meet customer demands and environmental goals, estimating an additional £850 million is needed. Wessex Water plans to invest heavily in improving water quality, reducing storm overflows, and building new infrastructure, including reservoirs. While this would increase customer bills by 29%, the company aims to support those struggling to pay with discounts and flexible payment plans.
Moreover, Northumbrian Water has requested that Ofwat refer its PR24 Final Determination to the Competition and Markets Authority (CMA). The utility believes the decision does not provide enough funding for the necessary investments to ensure the resilience and long-term health of its water and wastewater services. The company argues that Ofwat’s refusal to approve £160 million for asset health investment risks failing to address climate change impacts and aging infrastructure. Northumbrian Water is seeking an independent review to secure adequate funding for future service reliability.
The appeals to the CMA this week follow Thames Water’s decision to refer its Final Determination to the Competition and Markets Authority (CMA) for a redetermination, announced last week.
In contrast, Portsmouth Water has accepted Ofwat's final determination, confirming its largest-ever investment plan of £377 million. CEO Bob Taylor stated that while the region has historically had a plentiful water supply, a growing population and changing climate mean greater investment is needed. He added that the company is stepping up its efforts to prepare for these challenges.
Jon Phillips, chief executive of the Global Infrastructure Investor Association, told Smart Water Magazine: “Ofwat has a statutory duty to ensure water companies can secure the unprecedented levels of private investment needed to build new water infrastructure and maintain existing assets in the wake of climate change and population growth. Yet, the regulator's current regulatory approach is not working. A surge in appeals to the Competition and Markets Authority (CMA) signals deep flaws in the system, making the UK less attractive in the global race for capital." He noted that while the government has acknowledged these failings by establishing a Water Commission to drive reform, these efforts may come too late to fix PR24’s shortcomings, as investors would need urgent action now to restore confidence and secure the future of the sector.
Phillips also highlighted the government's directive for the CMA to enhance the UK's attractiveness to international investors: "These appeals will be a key test of that commitment. If the UK is serious about attracting the capital needed for critical infrastructure, it must create a regulatory environment that encourages, rather than deters, long-term investment."
David Henderson, Water UK Chief Executive, also commented in a statement: “Water companies need to invest billions to strengthen and expand infrastructure to support economic growth, secure our water supplies and end sewage entering our rivers and seas. Although many water companies can live with Ofwat’s decisions, an unprecedented six – serving the majority of customers in England - feel that they have no choice but to appeal to the Competition and Markets Authority. Companies hope it will overturn Ofwat’s decisions so they can get on with the job of helping deliver the Government’s overriding national priority – economic growth.”
The Water Services Regulation Authority, Ofwat, released a statement today in which Chris Walters, Senior Director for the Price Review at Ofwat, said: “As part of the standard process underpinning our Price Reviews, it is the right of companies to request a redetermination by the CMA. We will be re-stating our case as part of this process.
“Our PR24 final determinations unlock a quadrupling of investment by the sector. This will accelerate the delivery of work to deliver cleaner rivers and seas – as well as securing long-term drinking water supplies for customers.
“Final determinations were based on a robust examination of all funding requests made by companies to ensure every pound of customer bills provides value for money, delivers real improvements and enables the sector to attract the investment it needs.”
Ofwat's statement added that the next step will be for the Regulation Authority to formally make the references to the CMA, which will then have six months to make its own determinations. If required, this can be extended by up to a further six months.
The CMA’s decisions on these appeals will have significant implications for the future of water services in England and Wales, potentially influencing customer bills, investment in infrastructure, and the industry’s ability to meet environmental commitments.
