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This is a big deal that could get overlooked: the @CMAgovUK is considering overruling regulators on price controls - could lift costs for consumers by £3.7 billion. THREAD -->
Back in 2019, @Ofwat set rules on investment, prices and profits in the water market. They struck a good balance - keeping bills low and supporting investment. (1/n)
Four water companies appealed to @CMAgovUK - and the CMA are now considering overruling @Ofwat - a dangerous precedent, based on analysis we think is flawed (2/n)
For starters, the CMA’s provisional findings on the cost of capital - overruling far more detailed analysis by @Ofwat - could cost consumers £500 million over 5 years (3/n)
The CMA proposals go even further than some of the companies asked(!). We think they’re simply wrong - based on analysis that has some vital gaps and flaws (4/n)
We're not saying lower bills are always better: investment is critical, so it's a balance. But @Ofwat estimates that 90% of the additional money would just go to shareholders, only 10% to fund services/infrastructure (5/n)
Worse - the @CMAgovUK decision could set a dangerous precedent for energy, with big implications. If the CMA logic were applied to @Ofgem’s next price controls, energy consumers could lose £3.2 billion over 5 years (6/n)
Here’s what we find really troubling - our old research showed how regulators had got price controls wrong for years, allowing double digit returns for low risk investments, costing consumers billions: https://bit.ly/2GcyNcH (7/n)
Sector regulators had done brilliant and difficult work to put that right, standing up to lobbying to strike a better balance. The @CMAgovUK findings risk setting this progress back (8/n)
The context for all of this couldn’t be tougher - our research shows millions of people are already falling behind on utility bills due to Covid-19 https://bit.ly/2TC7wDp (9/n)
There’s still time for @CMAgovUK to get this right - and we’re confident they will. We hope they’ll take time to do more robust analysis to explore the feedback raised /END
