Thames Water defends its financial plan through to 2030

Thames Water says its financial plan through to 2030 is ambitious, deliverable, financeable and investible and would also see 500,000 customers enjoy reduced bills.

The water company was responding to water regulator Ofwat’s review of its financial plans, along with similar firms across England and Wales.

The Reading-based water provider had argued that its £19.8bn plan would allow it to provide record investment in infrastructure, meet new environmental standards and reduce river pollution, while tackling climate emergency and population growth.

It would have seen the average customer’s bill rise 44 per cent over the next five years.

Instead, it would see bills rise £99, from £436 to £535 a year, by 2029.

Ofwat approved a £16.9bn plan, adding that 20 per cent of this would be conditional on the firm “demonstrating it is ready and able to effectively deploy investment or that the investment will be effectively and efficiently targeted”.

The regulator will also be imposing a Turnaround Oversight Regime, forcing it to create a delivery action plan to show how it will expand delivery capacity, set out how it will deliver changes in operational performances, and launch a financial resilience plan.

An independent monitor could be recruited to report on its progress.

Ofwat chief executive David Black said: “Customers want to see radical change in the way water companies care for the environment.

“Our draft decisions on company plans approve a tripling of investment to make sustained improvement to customer service and the environment at a fair price for customers.

“These proposals aim to deliver a 44 per cent reduction in spills from storm overflows compared to levels in 2021. We expect all companies to embrace innovation and go further and faster to reduce spills wherever possible.”

Thames Water, which has its headquarters in Reading, said it would respond to the draft plans.

“Although Ofwat currently categorises our business plan as ‘inadequate’, this judgment rests on over 20 very specific tests around the scope of information to be provided, and evidence required to depart from Ofwat’s own assumptions,” a spokesperson said.

“Ofwat has made clear it will revisit its view if we provide further evidence to reach a final determination that is, in the round, affordable for customers, deliverable, financeable, as well as investable.

“We welcome the opportunity to provide Ofwat with further evidence about the need for the investment we plan to make, our costs and how we will deliver it.”

They continued: “Ofwat has asked us to look again at our turnaround plan, and is seeking enhanced oversight of our delivery against it. We are taking stock of our turnaround plan under our new leadership and reflecting on our progress to date.

“We will consider all of Ofwat’s proposals as we go through this process.”

The water company will respond by August 28, with Ofwat making its final determination by the end of the year.