Ofwat proposes drought pricing amid leaky pipe criticism

Water companies in England and Wales may be permitted to increase customer bills during droughts under proposed rule changes being considered by the sector's regulator, Ofwat. The plans, which are being likened to surge pricing, aim to reduce consumption when water is scarce amid an intense heatwave that has left most of the country in drought conditions and more than 27 million people facing usage restrictions.

Ofwat is examining whether to grant companies greater freedom to set charges that reflect seasonal scarcity or higher consumption. Under one model, customers could pay less during low-demand winter months and more during hot, dry summers. Another approach involves rising block tariffs, where essential water is charged at a lower rate, with progressively higher prices for greater usage. Implementation would likely depend on the widespread adoption of smart meters.

Several companies are already trialing such schemes on a small scale. Anglian Water has tested seasonal pricing with approximately 14,000 customers in Lincoln and Norwich, charging a higher rate per 1,000 litres between May and August. South West Water has trialed a rising block tariff with around 500...