Thames water set to hike your water bills by 44% as it battles to survive under billions of pounds of debt
22 April 2024, 09:28
Thames Water is looking to raise Londoners’ water bills to as much as £627 a year amid fears over the company’s financial stability.
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The group, which is battling to survive amid a funding crisis, has proposed increasing spending by £1.1 billion between 2025 and 2030.
The company is struggling under a huge £15bn of debt, leading to speculation it could be taken over by the government.
The utility giant - Britain's biggest water firm, with 16 million customers in London and the Thames Valley region - has revealed its new business plan for the five years to 2030 which would see spending rise to £19.8 billion, 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% rise over the five years.
But it added that the possible extra £1.9 billion investment would see average customer bills increase by another £19 over the five years - or around 44%.
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 had originally proposed increasing customer bills by 40% including inflation over the five-year period - with a proposed investment into the network of £18.6bn, but this was rejected by regulator Ofwat.
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 £15 billion 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% to fund an investment programme worth £18.7 billion 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 £500 million emergency funding package that was due to be paid at the end of April.
The company had £2.4 billion 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 June 12.
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".
Liberal Democrat Treasury spokeswoman Sarah Olney 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."
She said the Liberal Democrats will be tabling a Bill in Parliament on Monday, which would immediately put Thames Water into special administration.
