The UK’s biggest water company has put forward an investment offer that could increase customer bills even more than the 40% rise it already requested.
Thames Water, which serves 16 million customers in the south of England, 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.
But, if approved, this could mean an additional £19 a year bill increase on top of its inital plan for bill payers to be charged 40% more.
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Even higher bills?
Under the utility’s proposed business plan, for the five years to 2030 bills will rise to £608 a year – a 40% rise.
The average bill is currently £432.60 a year.
But if the extra investment is given the go-ahead, it could mean customers have to pay 44% more instead – £627 a year by 2030.
An investment of £18.7bn had already been proposed but under revised plans an extra £1.1bn has been offered to go into “projects benefiting the environment”, Thames Water said.
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Regulatory approval is required for the plans, and Ofwat is due to publish its draft view on 12 June.
What’s going on at Thames Water?
Thames Water has had to rethink its business plan as it faces collapse under the weight of £15bn of debt.
Investors have refused to pump a previously agreed £500m into the business, leading its parent company to default on some of its debt.
Thames Water has blamed Ofwat for this, saying it had imposed regulations that made it “uninvestable”.
The government is reportedly drafting plans to bring the water giant under state control in the event of its collapse.
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Sky’s Paul Kelso takes a look at what the future holds for Thames Water and how it is under threat of nationalisation.
The company had £2.4bn cash available in February, enough for it to remain solvent until next year.
It is said to be in 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.
The company has also come under intense scrutiny after missing sewage spill and leakage targets.
Thames Water said it discussed the original business plan “extensively with regulators and key stakeholders”.
An Ofwat spokesperson said: “Since October we have been in discussions with all companies, checking on their proposed plans and seeking further information.
“There has also been further information published in the last few months clarifying companies’ statutory commitments. Both these factors have required companies to review their proposed plans and revise their expenditure forecasts to reflect what would be required to fully comply with all statutory requirements.”