Water bills are going up every year until 2030 and tomorrow everyone will find out by how much.
After its initial determination in July, Ofwat publishes its final numbers after months of lobbying by the industry for the regulator to ease up and give more leeway to put up prices.
Most consumers will face a bill hike of at least 20% over five years, but the companies want to push them up by a lot more.
In the preliminary round, Ofwat allowed a 21% average price hike before inflation but suppliers argue that isn’t sufficient to deliver some £88billion worth of infrastructure improvements to halt the flood of sewage into Britain’s waterways.
On average, companies want a 40% rise but that goes up with the state of the supplier’s finances.
Debt-laden Thames Water, the poster child for how a water utility should not be run, reportedly wants a 53% hike to £667 just to stave off renationalisation.
Southern Water meanwhile wants customers to stump up an 84% hike.
Water companies expect easing of prices and returns from Ofwat
Ofwat’s problem is that to get private money to fund the massive investment the network needs there has to be some incentive and given undoubtedly some cost padding in the companies’ submissions, it’s a very tricky balancing act.
The sector's record of handing out big bonuses and dividends just adds to the complications.
Thames Water for example only yesterday managed to secure a £3 billion in emergency funding from a group of bondholders to help it meet payments on its £16 billion worth of debt.
The quid pro quo is the investment firms behind that rescue say a huge increase in bills is now required to secure the money.
Among the listed firms, Severn Trent PLC (LSE:LON:SVT) has asked for a 46% rise over five years to £580, South West Water (owned by Pennon Group PLC (LSE:LON:PNN, OTC:PEGRY)) 23% to £613 and United Utilities Group PLC (OTC:UUGRY) (LSE:UU.) 32% (£584) – see chart.
Share price movements for these three tomorrow will be an early indicator of whether investors think Ofwat has been lenient, harsh or got it just about right.