Ofwat demands Thames Water reduces planned price hike

Thames Water will be told to reduce its planned price increases when the industry's regulator announces its five-year review this week.

Thames, which supplies 13.6 million customers in the South-east, has asked Ofwat to allow it to increase prices by 17.2 per cent above inflation over the period to 2015, including a rise of about 10 per cent next year.

Ofwat will publish its review of all public and private water companies on Thursday. But while major suppliers such as Anglian are proposing increases of less than 1 per cent, raising its average bill by just £11 over five years, others want substantial increases.

South West Water wants a 7.1 per cent increase next year, while Severn Trent has asked for an 0.8 per cent rise in water bills, offset by a reduction of 1.9 per cent in sewerage charges.

Thames faces the greatest opposition. It has reduced its proposed investment over the five years, by £1bn to £5.5bn, since submitting initial plans, but now wants an even bigger increase in charges. The Consumer Council for Water says: "Customers will be left wondering why they are being asked to pay more for less."