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
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
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: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?