Water bills projection and uprating

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

Overview¶

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¶

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

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: