Thames Water warns it could hike bills by £200 a year to help cut sewage spills

Thames Water today warned that its annual bills could rise by almost £200 a year (PA Wire)
Thames Water today warned that its annual bills could rise by almost £200 a year (PA Wire)

Thames Water has warned that its annual bills could rise by almost £200 a year to £627 by 2030 to pay for investment projects to clean up rivers and prevent sewage spills.

Under a new investment plan unveiled on Monday the embattled utility said it would cut day-to-day spending in order to free up another £1.1 billion more to spend on environmental pro-jects from 2025 to 2030. That brings total spending over the five years to £19.8 billion.

By cutting costs elsewhere, the company said it would keep bill increases for its 16 million customers in London and the Thames Valley at 40 per cent, rather than the 56 per cent hike that had been feared, lifting bills from the current £432 a year to £608.

However, if another £1.9 billion of “potential investment” in cutting sewage spills goes ahead, bills will be another £19 higher, hitting £627 by 2029-30.

Thames Water’s main day-to-day expenses are staff, maintenance, and energy and raw materials.

The Standard understands that it does not plan to cut staff.

Chris Weston, chief executive of Thames Water, said: “Our business plan focuses on our customers’ priorities. As part of the usual ongoing discussions … 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.” Regulator Ofwat will respond to the plan on June 12, revealing whether it is “minded to” approve it.

Thames Water submitted an earlier plan to Ofwat in October, also including a 40 per cent increase in bills. Alongside that plan, it aimed to raise £750 million from its nine shareholders.

However, shareholders backed out of the fundraising last month, saying that Ofwat would not provide the “necessary regulatory support” for the five-year plan, making it “uninvestable”.

Given the point of difference between Thames shareholders and Ofwat was “regulatory support”, including topics like fines for sewage spills, questions over whether Thames will get funding are far from certain.

If funding is not provided, Thames could be nationalised, via a special administration regime. Parent company Kemble defaulted on some of its debts last week because of the removal of funding.

Sarah Olney, Lib-Dem MP for Richmond Park, said today that she would table a bill to put Thames Water into special administration.

She said: “This plan is a farce and the Government must now intervene to hold this polluting giant to account.”

Shareholders of Thames Water declined to comment on the plan.

Mike Keil, chief executive of the Consumer Council for Water, said: “On the surface, the proposal for more investment from Thames Water is a positive step for its customers that have endured some of the worst customer service in the sector.

“We should not lose sight of the fact that only 16 per cent of its customers thought the company’s proposed bill rises in its five-year plan were affordable. This announcement appears to offer nothing to ease the fears of those already struggling to pay.”