Water bills projection and uprating#

This documentation describes the water bills projection and uprating methodology used in PolicyEngine UK.

Overview#

We implement water bills projections through a combination of historical data analysis and regulatory projection data. The system uses:

  1. Historical data (2021-2025) from Ofwat average bills

  2. Regulatory projection data from Ofwat company-specific increases (2025-2030)

  3. Economic uprating using Consumer Price Index (CPIH) growth rates

Implementation#

Data sources#

Historical data#

The projection uses historical real water bills data from Ofwat:

  • 2021: £486 (real terms)

  • 2022: £470 (real terms)

  • 2023: £486 (real terms)

  • 2024: £492 (real terms)

  • 2025: £503 (real terms)

Data source: Ofwat average bills data for England and Wales

Regulatory projections#

We source company-specific water bill increases from the Consumer Council for Water (CCW) based on Ofwat’s price review data for 2025-2030. The data includes projected bills for 16 water companies covering both water and sewerage services.

Data source: CCW Water Company Bill Increases 2025-30

Projection methodology#

Historical period (2021-2025)#

  1. We convert real bills to nominal terms using CPIH values

  2. We calculate year-on-year nominal growth rates

  3. We normalize to 2021 baseline (index = 100)

Future period (2025-2030)#

  1. We calculate average of company-specific projected increases

  2. We apply Consumer Price Index (CPIH) uprating to account for inflation

  3. We compound inflation adjustments year-over-year

The methodology ensures that:

  • We preserve real increases from regulatory decisions

  • We apply additional inflation adjustments using CPIH forecasts

  • Future projections account for both policy changes and economic conditions

Code structure#

Core implementation#

  • Location: policyengine_uk/utils/water/forecast_water_bills.py

  • Function: project_water_bills()

  • Data: policyengine_uk/utils/water/ofwat_increases.csv

Parameters integration#

We store water bills year-on-year growth rates in:

  • Location: policyengine_uk/parameters/gov/economic_assumptions/yoy_growth.yaml

  • Parameter: ofwat.water_bills

Growth rates#

The model uses these resulting year-on-year growth rates:

Year

Growth rate

2022

5.2%

2023

9.2%

2024

4.4%

2025

6.1%

2026

6.1%

2027

5.1%

2028

3.8%

2029

4.3%