Ofwat pours cold water on Thames Water price rise

Thames Water wanted to increase bills by £29, but the regulator is having none of it.

by Emma Haslett
Last Updated: 14 Oct 2015
Splosh: that’s the sound of plans by Thames Water to introduce a £29 price rise sinking without trace, after industry regulator Ofwat said the increase is ‘not justified’.

Admittedly, over the past six years Thames Water has paid out £1.4bn in dividends to its shareholders – so it isn’t exactly short of cash. But the company says it needs the money to make new investments, including the fatberg-busting £1.6bn Thames Tideway Tunnel (at last: a positive spin on ‘throwing money down the drain’).

Prices are usually set by Ofwat every five years, and under Thames Water’s long-term plans, bills will rise by almost £100 over the next five years, from £354 this year to £426 by 2019-20, assuming inflation sticks around 2.5%. It says that when prices were last set in 2009, it hadn’t counted on ‘extra costs’, which add up to £291m.

To be fair, the company’s network does badly need investment: in April last year, it emerged that Thames Water loses 665 million litres a day through leaks in its pipelines – that’s enough to fill an Olympic swimming pool every five minutes. But Conservative MP Charlie Elphicke has argued that it could plug those leaks without the extra money: according to him, bills have risen by almost a third in the past six years, as its expenditure dropped 20%.

In general, water companies are about as popular as energy companies (ie not at all): MPs have told Ofwat it needs to ‘get a grip’, and have even suggested excess profits should be returned to customers – not a proposition that would be welcomed by the company’s owners, Australian bank Macquarie. Thames Water, though, is the only one of the UK’s 18 regulated firms to have applied for a price rise in advance of next year’s pricing review.

It’s not the only one seen in a negative light by its customers, though: one chap is so upset with Yorkshire Water’s price rises, he’s disconnected himself from mains water altogether. Not one to try at home, wethinks…

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