Troubled Thames Water has put forward new plans to boost spending and investment in its network, but warned this could see customer bills surge by 44%.
The group, which is battling to survive amid a funding crisis, has proposed increasing spending by £1.1 billion and revealed another potential £1.9 billion investment in its network as part of new business plans to regulator Ofwat.
This increased spend would see bills rise largely in line with the previous plans for a 40% rise over the five years.
But it added that the possible extra £1.9 billion investment would see average customer bills increase by another £19 over the five years – or around 44%.
If Ofwat was to give the full plans the go-ahead, this would see customer bills rise to £627 a year by 2030.
Thames Water chief executive Chris Weston said: “Our business plan focuses on our customers’ priorities.
“We will continue to discuss this with our regulators and stakeholders.”
Thames Water has had to rethink its business plan in a bid to stave off collapse as it crumbles under the weight of £15 billion of debt.
Its investors have refused to pump in the cash needed to plug a funding gap and reports suggest the Government is working on plans to effectively nationalise the water giant.
This would see the taxpayer foot the bill for its mammoth debts.
Thames Water originally wanted to raise customer bills by 40% to fund an investment programme worth £18.7 billion under plans published in October.
But the company said Ofwat had imposed regulations on the plan which made it “uninvestable”, with its shareholders pulling a £500 million emergency funding package that was due to be paid at the end of April.
If you see something wrong, the quickest way to let us know is to report it online.
It’s our job to put things right – day or night, rain or shine.
Just go to https://t.co/T5RNVu8Lsx pic.twitter.com/vMwpAd7UPg
— Thames Water ? (@thameswater) April 15, 2024
The company had £2.4 billion cash available as of March, enough for it to remain solvent for the next 15 months.
Thames Water is ring-fenced from its holding company Kemble, which has a £190 million loan due for refinancing by the end of this month – a debt that the group has already warned it will not be able to repay.
Thames Water is said to be in ongoing discussions with its existing shareholders – which include the Universities Superannuation Scheme (USS), China’s sovereign wealth fund, a Canadian pension fund and the BT Pension Scheme.
Ofwat is due to give its initial decision on the proposed business plan, known as PR24, on June 12.
Thames Water is reportedly preparing to approach lenders to fund the five-year spending plans, which means it could take out a new loan.
As well as being saddled with huge debts, the company has also come under intense scrutiny after missing sewage spill and leakage targets.
It said the updated business plans come after it discussed the original business plan “extensively with regulators and key stakeholders”, including the Department for Environment, Food and Rural Affairs (Defra) and the Environment Agency.
A Defra spokesman said: “Customers cannot be expected to pay the price for Thames Water’s poor performance, which is why Ofwat should use their full powers to protect customers and ensure value for money in their bills.
“As with all water company plans, this is not yet final and Ofwat will now independently scrutinise this latest version to ensure it delivers for customers and meets the company’s legal requirements and government targets.”
She said: “It would be an absolute disgrace if customers are forced to foot the bill for Thames Water’s shambolic failings.”
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “We should not lose sight of the fact that only 16% of its customers thought the company’s proposed bill rises in its five-year plan were affordable.”
Gary Carter, national officer of the GMB trade union, called on the firm’s shareholders to “fork out to give the company a chance to turn things round”.
