Regulators mistakes cost customers £24bn over 15 years, study shows

Brits have been overcharged a massive £24bn for their water, energy and telecoms over the past 15 years due to regulators’ mistakes, a new report has found.

Citizens Advice said that “midjudgements” from regulators Ofgem, Ofwat and Ofcom had caused customers to pay far too much for pipes and wires connected to their homes.

Read more: Ofgem proposals could set British solar back by up to five years

The regulators’ models, which helped set prices, produced far too high cost estimates, and over-estimated the risk to investors.

Citizens Advice called on companies to return some of the money to customers, and for regulators to fix their modelling.

“At a time when so many people are struggling to pay their essential bills, regulators need to do more to protect customers from unfair prices,” said the group’s chief executive Gillian Guy.

“They have started to take steps in the right direction but it is vital they continue to learn from their past mistakes when finalising their next price controls.”

The study found that customers had been overcharged around £11bn too much from 2004 to today for their energy. Meanwhile water bills had been £13bn too high from 2005, while broadband and phone bills were overpriced by £100m between 2014 and 2018.

Data was not available from 2004 for all sectors.

Read more: Ofwat pours cold water on providers' business plans

Ofgem said that while it does not agree with the estimate, it welcomed the recommendations in the report. Ofcom said its “decisions have helped customers benefit from more choice and better services,” adding that Citizens Advice found its cost forecasts to be largely accurate.

Ofwat said it had already made changes to the way it forecasts the cost of capital, adding that “customers have benefitted from a decade of falling bills.”