Will 2023 bring significant business water price rises?
Yes, as of April 1, 2023, the majority of businesses experienced a substantial spike in their business water rates.
Business water rates saw an average increase of 14.4% in April 2023.
Two factors are contributing to the escalating costs of the business water bill. Let’s delve into each of them:
Inflationary Pressures on Business Water Infrastructure
The energy crisis and various other factors have driven UK inflation to its highest level in four decades. Consequently, the operational expenses associated with business water supply and with maintaining water infrastructure have seen a significant rise. As a result, in April 2023, wholesale water rates experienced an increase, and this cost is being passed on to households and businesses that use water.
Water UK, a membership organization representing the water industry, has projected a 7.5% inflation-driven increment in water bills for April 2023.
Removal of the Default Water Price Cap
The second factor contributing to the substantial hike in default water rates, which most businesses pay, is the reassessment of the default price cap calculation comparing business water suppliers by Ofwat, the regulator. This reassessment has led to a 30% surge in the retail rates charged by business water suppliers.
On average, this alteration results in an overall increase in water bills of 6.4%, excluding the effects of inflation.