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Thames Water has launched an appeal to allow it to increase bills by more than the regulator wants to permit.<\/p>\n
The UK’s largest utility company is calling on the competition regulator to overturn a decision from the water industry regulator, Ofwat, which caps bill rises at 35% over the next five years.<\/p>\n
Thames, which is in severe financial difficulties already, is also waiting for the courts to approve a \u00a33bn rescue from investors.<\/p>\n
But in the longer run, the company says bills also need to rise by more than Ofwat has suggested to cover the costs of investing in water infrastructure.<\/p>\n<\/div>\n
The company, which provides water services in the south-east of England, said the appeal was “in the interests of our customers and the environment”.<\/p>\n
Thames has argued bills need to rise by 53% over the five-year period.<\/p>\n
Its chairman, Sir Adrian Montague, said bigger bill rises would allow Thames to provide “safe and resilient” water supplies that could cope with the impact of climate change.<\/p>\n
Other water companies are also permitted to lodge appeals against bill settlements, which are specific for each utility company. <\/p>\n
Thames is the first to have done so, while six others have said they will not appeal: Severn Trent, United Utilities, Pennon plus Dwr Cymru Welsh Water, SES and Hafren.<\/p>\n
The settlements are designed to balance the interests of consumers with the needs of companies to raise money for investment, and return profits to shareholders.<\/p>\n
Critics say water companies have taken too much profit, and built up debt, instead of investing in infrastructure over recent decades, resulting in sewage discharges, burst pipes, and leaks.<\/p>\n
Water companies argue that a growing population and the challenges of a changing climate mean higher bill rises are needed.<\/p>\n
By challenging Ofwat’s bill settlement, Thames kickstarts a review process that could take up to six months to resolve.<\/p>\n
In the short term, Thames, with a debt burden of \u00a317bn, is seeking an emergency cash lifeline from investors to shore up its finances.<\/p>\n
Mike Keil, chief executive of the Consumer Council for Water, a body speaking for bill-payers, said: “Customers of Thames Water are already facing steep bill rises.<\/p>\n
“They will be incensed the company now has the temerity to pursue an even larger increase.”<\/p>\n
He said customers wanted to see investment and improvements to services, but also expected “value for money and to be treated fairly”.<\/p>\n<\/div>\n