Thames Water calls for 11% price hike to pay for "super sewer"

Half-year pre-tax profits were up by nearly a fifth to £134.2 million

Thames Water, the UK's biggest water company, wants to raise bills by more than 10 per cent above the cost of inflation over a five-year period, it has told Ofwat.

Thames Water, the UK's biggest water company, wants to raise bills by more than 10 per cent above the cost of inflation over a five-year period, it has told Ofwat.

The regulator said the company had submitted by far the highest proposed bill increase of any of the major water supply and sewerage firms that have put forward their plans for 2015-20.

Thames, which pays no corporation tax, last week announced half-year pre-tax profits were up by nearly a fifth to £134.2 million, helped by an above-inflation tariff hike. It is already at loggerheads with the regulator over customer charges.

Nine firms said they would cut bills or leave them flat in real terms over 2015-20, after Ofwat asked them to consider scaling back increases amid a squeeze on household finances.

But Thames Water said its plans to invest £2.8 billion in the Thames Tideway Tunnel, a major new sewer, mean it must add £8 above inflation for each of the five years from 2015 - and that without this, bill rises would be below inflation.

Ofwat figures show the supplier plans a 6.8 per cent real terms cut in average water supply bills but a 34.8 per cent increase for sewerage, giving an average real terms rise of 10.4 per cent.

Thames serves 14 million customers in and around London. It said its current typical £358 bill is £50 below the average for England and Wales but would increase to £398, plus inflation, for 2020.

Chief executive Martin Baggs claimed seven out of 10 customers found the plan "acceptable", with the capital's Victorian water and sewerage infrastructure in urgent need of upgrading.

He said: "It is clear that bill increases are only acceptable if they are absolutely essential, but customers have told us to avoid storing up problems for the future.

"Our plan will deliver value for money on the things our customers have told us matter most."

Last week, Thames Water said it did not expect to pay any more corporation tax for up to a decade because it planned to continue £1 billion annual infrastructure investments, meaning it can defer £20 million a year in tax liabilities.

Last month it was slapped down by Ofwat over plans for a one-off £29 bill hike for next year, because of unforeseen costs including customers failing to pay their bills, as well as the Thames super sewer.

Thames Water is owned by Kemble Water Holdings, whose investors include Australian investment firm Macquarie Group.

Proposals by Thames and its rivals set out plans for their charges for 2015-20, to which will be added the retail prices index inflation figure, which was 2.6% in October.

Northumbrian and Yorkshire said bills would be flat in real terms, with 0.5 per cent and 0.6 per cent falls for United Utilities and Southern, and a 3.8 per centdrop for Severn Trent, and 4.5% for South West.

Dwr Cymru Welsh Water plans a 4.8 per cent real terms fall, with Wessex proposing a 6 per cent reduction and Anglian a cut of 8.4 per cent.

Ofwat chairman Jonson Cox said: "Ofwat challenged companies to listen carefully to their customers in preparing their plans.

"Our board made clear that current economic circumstances gave companies an opportunity to deliver falling bills in real terms over the coming five years while maintaining substantial ongoing investment."

Ofwat chief executive Cathryn Ross said it would carry out an independent and rigorous process to analyse and challenge companies' plans "to make sure that customers get a fair deal".

The regulator said that in April it would give its judgment on the firms' plans, including "how well they have taken account of their customers' priorities".

Those judged "outstanding across the board" will be fast-tracked while those "requiring some intervention" will go through a standard process.

Any company whose plan has "significant shortcomings" will be asked to resubmit it. Final decisions on prices will be made by January 2015, with new bills due to come into effect the following April.

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...