Thames Water has asked to raise average household water bills by £228 a year, or £18.99 per month, to fund infrastructure investment. The company, which serves southeast England, said the proposed increase is necessary to cover upgrades, but regulators have pushed back with spending cuts that Thames Water claims are 'not tenable' and render its plan 'uninvestible'.
The water company submitted a five-year plan to Ofwat, the industry regulator, which initially proposed limiting bill increases. Thames Water now seeks a 52% rise, taking average annual bills from £433 to over £650. Ofwat had already rejected an earlier 40% increase request.
Thames Water warned of a 'multi-billion-pound gap' between what it is allowed to charge customers and what is needed to meet infrastructure targets. It said Ofwat's draft determination cut proposed expenditure by 25%, including halving spending on wastewater treatment upgrades, and set 'unachievable' targets that expose the company to disproportionate penalties.
The company faces a financial deadline in June, when it will run out of money unless it raises £3.3bn in new equity. Securing that investment depends on regulatory approval of its turnaround plan. Thames Water argued that 'now is the time for difficult choices', though former shareholders who extracted dividends after privatisation are not affected.
Adrian Montague, chairman of Thames Water, said the company is committed to supporting customers who struggle to pay. The regulator is expected to make a final determination on the plan later this year.
