Thames Water Proposes 59% Bill Hike for Infrastructure Investment

Thames Water, the UK's largest water and wastewater services company, has proposed a significant increase in customer bills to fund its turnaround efforts and infrastructure improvements. The utility company, which serves 15 million customers across London and the Thames Valley, suggests raising average yearly water bills to £666.50 per customer by 2030, with a potential increase to £696 if granted additional spending allowances by the regulator.

This proposed increase represents a substantial 59% rise from current levels, far exceeding the 23% increase suggested by Ofwat, the water industry regulator. The average bill for the period 2025 to 2030 would be £638 under this proposal, marking a £200 per year increase from the 2023-2024 average of £433.

Chris Weston, Thames Water's chief executive, defended the proposed increase, stating:

"On the basis of the draft determination given to us by Ofwat, both our own and independent analysis shows that our plan would be neither financeable nor investable and therefore not deliverable. It would also prevent the turnaround and recovery of the company."

Weston emphasized that the increased bills would fund new infrastructure and service improvements, benefiting both households and the environment. He noted that customers are not being asked to pay twice but to compensate for years of focus on keeping bills low.

The company plans to invest £20.7 billion in its core plan, with an additional £3 billion through gated mechanisms. This investment is crucial for addressing longstanding issues within Thames Water's extensive network, which includes 31,100 km of water mains and 109,400 km of sewers.

However, the water industry has expressed concerns about Ofwat's plans to cap water bills. Water UK, a trade association, warned that limiting the rise in household water bills to £19 a year on average could create a "material risk" of suppliers failing to raise sufficient funds for infrastructure improvements, including addressing sewage leaks.

David Henderson of Water UK cautioned that Ofwat's approach could deter much-needed investment in the sector. The water industry argues that significant funding is required to modernize Britain's aging water infrastructure, much of which dates back to the Victorian era.

Thames Water's proposal comes at a time when the company faces numerous challenges, including high levels of debt, infrastructure issues, and criticism over sewage spills. In 2017, the company was fined £20 million for sewage spills into the Thames River, highlighting the urgent need for infrastructure upgrades.

As the debate over water bill increases continues, it's clear that balancing the need for infrastructure investment with affordability for customers remains a significant challenge for the UK water industry.