Troubled water company warns of 44% increase in bills
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Your support makes all the difference.A troubled water company has put forward new plans to boost spending and investment in its network, but warned this could see customer bills surge by 44 per cent.
Thames Water, which is battling to survive amid a funding crisis, has proposed increasing spending by £1.1bn and revealed another potential £1.9bn investment in its network as part of new business plans to regulator Ofwat.
The utility giant – Britain’s biggest water firm, with 16 million customers in London and the Thames Valley region – said its new business plan for the five years to 2030 would see spending rise to £19.8bn, with the extra being used for environmental projects.
This increased spend would see bills rise largely in line with the previous plans for a 40 per cent rise over the five years.
But it added that the possible extra £1.9bn investment would see average customer bills increase by another £19 over the five years – or around 44 per cent.
If Ofwat was to give the full plans the go-ahead, this would see customer bills rise to £627 a year by 2030.
Thames Water chief executive Chris Weston said: “Our business plan focuses on our customers’ priorities.
“As part of the usual ongoing discussions relating to [the business plan], we’ve now updated it to deliver more projects that will benefit the environment.
“We will continue to discuss this with our regulators and stakeholders.”
Thames Water has had to rethink its business plan in a bid to stave off collapse as it crumbles under the weight of £15bn of debt.
Its investors have refused to pump in the cash needed to plug a funding gap and reports suggest the government is working on plans to effectively nationalise the water giant.
This would see the taxpayer foot the bill for its mammoth debts.
Thames Water originally wanted to raise customer bills by 40 per cent to fund an investment programme worth £18.7bn under plans published in October.
But the company said Ofwat had imposed regulations on the plan which made it “uninvestable”, with its shareholders pulling a £500m emergency funding package that was due to be paid at the end of April.
The company had £2.4bn cash available as of February, enough for it to remain solvent until next year.
It is said to be in ongoing discussions with its existing shareholders – which include the Universities Superannuation Scheme (USS), China’s sovereign wealth fund, a Canadian pension fund and the BT pension scheme.
Ofwat is due to give its initial decision on the proposed business plan, known as PR24, on 12 June.
Thames Water is reportedly preparing to approach lenders to fund the five-year spending plans, which means it could take out a new loan.
As well as being saddled with huge debts, the company has also come under intense scrutiny after missing sewage spill and leakage targets.
It said the updated business plans come after it discussed the original business plan “extensively with regulators and key stakeholders”, including the Department for Environment, Food and Rural Affairs (Defra) and the Environment Agency.
A Defra spokesman said: “Customers cannot be expected to pay the price for Thames Water’s poor performance, which is why Ofwat should use their full powers to protect customers and ensure value for money in their bills.
“As with all water company plans, this is not yet final and Ofwat will now independently scrutinise this latest version to ensure it delivers for customers and meets the company’s legal requirements and government targets.”
Liberal Democrat Treasury spokeswoman Sarah Olney said Thames Water’s plan would see it pour “more money down the drain”.
She said: “It would be an absolute disgrace if customers are forced to foot the bill for Thames Water’s shambolic failings.
“Ofwat cannot allow these bill hikes to go ahead.”
The Liberal Democrats plan to table a bill in Parliament on Monday calling for Thames Water to be put into special administration, saying this is the “only way Thames Water can become a financially safe company which cares about the environment”.