LONDON (Reuters) - The government has written to the country's biggest water companies, asking them to reconsider looming price hikes given that households are already struggling to meet rising utility bills, it said on Tuesday.
Water companies such as Pennon, Severn Trent and privately-owned Thames Water were permitted by industry regulator Ofwat in a 2009 review to raise prices by an average of 0.5 percentage points above inflation in 2014 and 2015.
"We know that household budgets are under pressure and keeping water bills affordable is a crucial way we can help hardworking people," said Environment Secretary Owen Paterson.
Rising utility bills have shot to the top of the political agenda after four of Britain's "big six" energy suppliers including British Gas parent Centrica raised charges by more than three times the rate of inflation.
The opposition Labour party has sought to reflect public anger on the issue as part of a shift in its line of attack to real incomes, which have not yet risen for most Britons despite revived economic growth. Labour has said it would freeze power prices for 20 months if it wins a general election due in 2015.
In his letter to water company chiefs, Paterson said the price limits were set by Ofwat before the lower cost of financing the water companies had enjoyed over the last few years was properly understood.
"In considering this choice about price rises at a time when many households are feeling the pinch, I know that you will be fully alive to concerns about the public perception of the industry," Paterson said.
The letter comes after a spokesman for Prime Minister David Cameron said last week the government would take action to help households struggling to meet rising water bills, in a signal that water companies will face greater political scrutiny over pricing.
However the letter does not contain any reference to possible sanctions if the water companies ignore the government's plea.
Ofwat said this month it planned to block an 8 percent price hike proposed by Thames Water because it was not justified.
(Reporting by Brenda Goh and William James; Editing by David Holmes)
- Politics & Government
- Budget, Tax & Economy
- Ofwat
- water companies
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