This won’t go down well. The company, which made a £549m profit in 2012 – and didn’t pay any corporation tax – increased bills by 6.7% (an average of £80 per household) last year. Its average annual bill is now £354.
In Thames Water’s defence, the charge will be spread over more than a year, so it won’t be as noticeable as if it had been a one-off. And its infrastructure costs are rising: not only is it building the Thames Tideway Tunnel (which it’s already spent £273m on), but the Environment Agency has increased its charges and it’s busy constructing a £4.2bn ‘supersewer’, designed to withstand even the most glutinous of fatbergs.
That said, we're not sure about its unpaid bills argument. If Tesco began introducing one-off charges when it had had more shop-lifters than usual, MT can’t help but think Sainsbury’s would see an unprecedented increase in market share…
But alas, Thames Water customers don’t have that kind of choice. Instead, prices are supposed to be kept at bay by water regulator Ofwat, which sets prices over five-year cycles (the last one was in 2009). Companies can ask for more in ‘special circumstances’ (like unpaid bills), though.
Stuart Siddall, Thames Water’s chief financial officer and ‘bad news deliverer-in-chief’ (we don’t envy him) did his best to defend the company.
‘At the beginning of a five year period there is always a small number of potentially significant costs and revenues that can be clearly identified but not quantified,’ he gibbered.
‘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.’
This on the same day that Labour pointed out the UK’s six largest energy companies have made £3.3bn in profits over the past three years.
Shadow energy and climate change secretary Caroline Flint said today that the ‘dominance of energy giants’ needs to be ‘broken’.
‘[We must] protect the public from being ripped off and create a tough new energy watchdog with the power to force energy companies to pass on savings to consumers,’ she added.
So now banks have been beaten into submission, are utilities companies the new bad guys? The issue of big profits and bigger price rises is slowly becoming more potent. Our money’s on that for Moral Panic 2014. We can see the headlines already…