Thames Water pushes for bill increase of 45%, while admitting a fifth of its customers are already struggling to pay
Water bills could rise by nearly £200, despite Thames Water acknowledging that more than a fifth of its customers are already struggling with payments.
The company, based in Reading, wants the regulator to approve its plans which would see the average charge to households soar from £433 per year to £628 by 2030 – an increase of 45 per cent.
Regulator Ofwat wants the increase to be capped at £19 a year, taking bills to no more than £535 per year – just over £100, and an increase of 24 per cent.
Thames Water says this would not be enough to allow it to invest in network upgrades.
The company is already struggling and there are concerns it may not have enough cash to continue operating after May next year.
The company’s CEO, Chris Weston, said it was acting on feedback from consumers who wanted “safe and resilient water supplies”, a focus on wastewater, and improvements to its customer service.
Without any investment, he continued, Thames Water’s plan “would be neither financeable nor investible” and would prevent the company from coming out of the finanical hole it finds itself in.
“We want to deliver a considerable increase in investment in our infrastructure, with total expenditure of £20.7bn in our core plan and a further £3bn through gated mechanisms,” he said, adding that structural underfunding has led to significant challenges to the company.
“The money we’re asking for from customers will be invested in new infrastructure and improving our services for the benefit of households and the environment.
“They are not being asked to pay twice, but to make up for years of focus on keeping bills low.
“In parallel, we are increasing our support to bill payers by introducing an improved social tariff for those struggling to pay, increasing by nearly 70 per cent the number of those who will benefit from this support, to 647,000 households.”
Thames Water says to help customers in water poverty it will introduce an affordability package that would include a “highly targeted” social tariff for 7.5 per cent of its customers, as well as support for customers who have arrears.
Every five years, Ofwat has to set the prices that water companies can charge.
The next period starts in April next year, and runs through to Mach 2030.
The regulator insists that bill increases cannot cover works that companies have already funded, and must ensure an efficient delivery of investments, including reducing the average number of storm overflows to just 16 per year by 2029.
Other targets include cutting pollution incidents to zero and reducing greenhouse gas emissions by 13.8 per cent.
Announcing its proposals in July, Ofwat’s chief executive David Black said: “Let me be very clear to water companies.
“We will be closely scrutinising the delivery of their plans and will hold them to account to deliver real improvements to the environment and for customers and on their investment programmes.”
Ofwat has allowed Thames Water £16.9bn to invest on improving services, with a fifth of that funding is conditional on the company demonstrating it can deploy the funding effectively.
A price review process will see customers’ money clawed back if investment is not delivered.
It also has a Turnaround Oversight Regime plan in place and could appoint an independent monitor to report on the company’s progress.
Thames Water’s chairman, Sir Adrian Montague, called on Ofwat to back the larger increase, arguing that the scale of cuts the regulator is proposing would not be tenable, and would leave the company with a “a multi-billion pound gap between what we are allowed to charge our customers and what is needed to deliver against the ambitions that customers and stakeholders have set for us”.
“After decades of focusing on keeping bills low, now is the time for difficult choices,” he said.
“It’s the responsibility of the company, our regulators and the Government to seek solutions in the best interests of customers and the environment.”
