June 22, 2024

Thames Water could raise bills to as much as £627 a year to pay to fix its leaky network, after promising to invest up to £3bn more over the next five years.

The embattled water supplier said on Monday that it had updated its spending plans for 2025 to 2030 after discussions with the industry regulator, Ofwat.

In October, it submitted its business plan, known as a PR24, to Ofwat, pledging to spend £18.7bn over the period, and raise bills by 40% to £610 excluding inflation.

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The company has now said it will spend a further £1.1bn – totalling £19.8bn – to address environmental concerns over sewage dumping in the sector.

Thames said it could spend £1.9bn on top of this – totalling £21.7bn over the period – depending on the availability of labour in its supply chain, which it would agree on an annual basis with Ofwat. If this occurred, bills for Thames’s 16 million customers would reach £627 by 2030, a 44% increase, excluding inflation.

Thames is under intense scrutiny amid fears over its financial stability and questions over whether its shareholders are willing to pay upfront for its investments, before they are recovered from consumers through bills.

The government is preparing plans in case the debt-laden company collapses, including renationalisation. The Guardian revealed last week that Whitehall contingency plans for a renationalisation could include the bulk of its £15.6bn debt being added to the public purse, with some lenders to its core operating company potentially losing up to 40% of their money.

Thames said on Monday it had been able to up its spending without increasing bills “due to a rebalancing of operating and capital expenditures”.

The Thames Water chief executive, Chris Weston, said: “Our business plan focuses on our customers’ priorities. As part of the usual ongoing discussions relating to PR24, we’ve now updated it to deliver more projects that will benefit the environment.

“We will continue to discuss this with our regulators and stakeholders.”

Shareholders said last month they were not willing to put in a promised £500m while a standoff between Thames and Ofwat continued.

The Guardian revealed last week that Thames was considering issuing more debt to help fund its plans, adding to its £15.6bn debt pile.

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