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Thames Water looks to raise bills by £29

The water supplier says one-off payment will cover the cost of a new sewer development

water hoseThames Water, the largest water supplier in the UK, has asked Ofwat, the Water Services Regulation Authority, for permission to raise bills by £29 per household.

The supplier stated that the increase is necessary to front the costs of Environment Agency charges and the construction of the new Thames Tideway Tunnel.

Profits fall by one-fifth but still remain high

Thames Water recently announced revenues of £1.8 billion, which represent a fall of roughly one-fifth based on last year’s profits. The water supplier’s chief executive, Martin Baggs, was handed a pay rise and a £274,000 bonus.

The one-off payment is unlikely to be well received by consumers, particularly as Thames Water’s prices have risen by 6.7% in the past financial year.

Sir Tony Redmond of the Consumer Council for Water said: “Many other water companies absorbed the costs that Thames say they are facing – and they have done so without applying for a further price increase. We believe that Thames Water should do the same.

“Our research shows that one in seven customers say they can’t afford their water bill. This is reflected in an increasing number of customers defaulting on payments to their water company. Thames Water’s price hike will add to the problem.”

Ofwat to decide in three months

The final decision regarding the £29 payment will be made by the water regulator in the next three months. Thames Water is currently mid-way through an agreed price control period which is set to run until 2015.

Stuart Siddall, chief financial officer for Thames Water, said: “At the beginning of a five-year period there are always a small number of potentially significant costs and revenues that can be clearly identified but not quantified. These are set out at the time of the price review and either the company or Ofwat can seek an adjustment, upwards or downwards, once the actual costs and revenues are known. That is what we are doing now.”

A break-down of the £29 payment reveals that £16 of the total amount will be used to cover increases in bad debt. The latter has been attributed to the current financial situation.

Thames Water supplies 14 million consumers in the UK and says that with an average bill of £354, its prices will still be amongst the lowest in the country despite the one off payment.

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