Water supply firms to up trading in bid to cut bills

Household water bills will fall under sweeping reforms designed to usher in a new era of sewage and water trading by supply companies.

Ofwat, the UK’s water regulator, said consumers stand to see a £1 billion benefit if the UK’s 18 supply firms increase the amount of water they trade.

Companies will also be allowed to buy and sell human sludge to either power their own facilities or sell on to farmers as fertiliser.

Plans to increase prices by lower levels of inflation to keep bills down are also on the table.

Cathryn Ross, Ofwat boss, said: “We want to kick-start water trading where this will help keep bills down and stop us taking too much water from our rivers.”

The proposals will also look at using consumer prices index inflation to set price hikes rather than the higher retail prices index measure.

CPI is normally lower than RPI, so the average £385 cost per year for water per household is likely to rise by less in future.

Just 4% to 5% of water supplies are traded between UK supply companies and that has remained constant since the early 1990s.

Helping companies with scarce water supplies buy water from firms with plentiful supplies will cut down on the amount of treatment facilities needed, reducing costs for companies which can be passed on to consumers.