An environmental group is to take legal action against Ofwat, the water regulator, accusing it of unlawfully making customers pay for decades of neglect by the water industry.
River Action will file the legal claim this month, arguing that bill rises for customers that have been approved by the regulator could be used to fix infrastructure failures that should have been addressed years ago.
The group argues customers could be forced to pay twice as a result. Under the rules, the public should not pay for investment to make water companies compliant with their permits to operate. This includes adhering to limits on discharges of raw sewage into rivers and a requirement to make sure treatment works are functioning properly.
Water companies are under investigation by Ofwat for breaches to their permits, an inquiry that is being run alongside a criminal investigation by the Environment Agency.
River Action’s legal challenge focuses on funding allocated for wastewater treatment works and pumping stations by United Utilities in and around Lake Windermere.
The group will argue Ofwat has allowed United Utilities to divert funds meant for future projects to deal with past failures. It is not suggested that United Utilities has acted unlawfully.
“We believe Ofwat has acted unlawfully by approving … funds without ensuring they are spent on genuine improvements to essential infrastructure,” said Emma Dearnaley, the head of legal at River Action. “Instead, this … funding is being allowed to be used to cover up years of failure.
“Ofwat has signed off on a broken system where customers are being charged again for services they have already funded. The cost of fixing the UK’s crumbling water infrastructure should fall on the companies and their investors, not on the British public.”
River Action believes that under PR24, the price review approved by Ofwat in January, the regulator has probably permitted other firms to operate in a similar way, leaving customers to pay for failings that should have been fixed with previous funding.
Ricardo Gama, of Leigh Day, which is representing the campaign group, said: “Ofwat has said … it won’t let price rises be spent on fixing historic issues which are leading water companies to breach their permits.
after newsletter promotion
“They’ve said in black-and-white terms that customers won’t be expected to pay twice. But in documents seen by River Action it looks like Ofwat hasn’t done its homework in checking whether the money it’s letting United Utilities take from customers will actually be used for that purpose.”
An Ofwat spokesperson said: “We reject River Action’s claims. The PR24 process methodically scrutinised business plans to ensure that customers were getting fair value and investment was justified.
“We agree that customers should not pay twice for companies to regain compliance with environmental permits, and have included appropriate safeguards in our PR24 determinations to ensure this, which we will monitor closely, taking action if required. We will respond to their letter in due course.”
