Regulator blocks Thames Water's bid for £29 surcharge on bills

The water industry regulator, has blocked Thames Water's "unjustified" attempt to add a £29 surcharge to household bills in the capital next year.

The decision by Ofwat was welcomed by consumer groups yesterday and led to calls for similar action by other utility regulators.

Thames Water, which serves 14 million households in London and the South-East, said the one-off surcharge was needed to help cover the rising cost of the capital's £4bn supersewer and other "unforeseen" burdens, such as increased levels of unpaid bills. It would have added 8 per cent to bills, taking the average to nearly £400.

However, Ofwat said the company, which is owned by a consortium led by the Australian bank Macquarie, had overestimated the extra costs. The watchdog's chief regulation officer, Sonia Brown, said: "We said we would challenge Thames Water's request. We have looked at the details and do not believe the current evidence justifies an increase in bills."

The watchdog's decision is subject to further consultation.

Sir Tony Redmond, London and South-east chairman of the Consumer Council for Water, said: "Other water companies have absorbed many of the same costs Thames says it is facing."

The shadow London minister Sadiq Khan, said: "We also need urgent action to bring down the cost of housing, transport and energy bills." A Thames Water spokesman said: "We will review Ofwat's draft proposals, and submit our response in due course."

The company already has the all-clear to raise its bills by 1.4 per cent above inflation from next year.