A WATER firm with 16 million customers has asked for permission to charge customers even more after a 35% bill hike.
Thames Water has asked Ofwat, the water regulator, to allow it to bill customers even more over the coming years than previously granted.
The firm has already been granted a 35% rise in bills over the next five years, after it had previously lobbied for a 59% hike.
Now, it wants the Competition and Markets Authority (CMA) to review Ofwat’s decision, a move that chairman Adrian Montague said is “in the interests of our customers and the environment”.
He added the appeal is aimed at “putting the business on a long-term stable footing so we can succeed in our turnaround, and build and maintain an infrastructure that supports growth and can withstand the effects of climate change”.
Mr Montague said Ofwat’s current allowance will “impact our ability” to fund the improvements needed to its vast network of pipes, sewers and drains, which are creaking from a “severe lack of investment over recent decades”.
The move is likely to spark further fury among politicians and consumer groups, who have already expressed outrage at Thames’ upcoming bill increases.
It comes as the company has actively tried to defend paying large bonuses to senior executives while it has seen worsening performance on sewage pollution.
The company even threatened to increase the salaries of its top directors if Ofwat follows through on plans to limit bonus payments.
Thames Water is also on the verge of collapse.
The firm has racked up a roughly £19billion debt pile, and only has enough cash to see it to March 24.
It’s waiting for a court decision in the coming days which would allow it to take out another £3.3billion loan from a selection of large hedge funds, asset managers and other lenders.
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The emergency loan has an unusually high interest rate of 9.75% over two-and-a-half years.
This is designed as a temporary measure to keep it operating while it finds a new source of permanent funding.
If Thames does not get the emergency loan it will likely fall into Government hands until officials can find a new owner.
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It comes after Ofwat revealed water bills would rise by an average of £31 per year over the next five years in England and Wales.
The increase was significantly higher than the expected average rise of around £20 a year per household, outlined in the regulator’s draft proposals in July.
Ofwat said the increase would pay for a £104billion upgrade of the water sector to deliver “substantial, lasting, improvements for customers and the environment”.
Southern Water customers face the sharpest rise, with bills surging by a staggering £224 (47%), pushing the average yearly cost to £703.
Not far behind, Hafren Dyfrdwy bills will jump by 32%, from £447 a year to £590.
South West Water bills will also rise from £520 a year to £686.
That’s according to new analysis from industry body Water UK.
The increases are higher than those outlined by regulator Ofwat in its recent five-year price limits just before Christmas, as they now include inflation.
Water UK has justified the rise by citing an ambitious £104billion investment programme spanning the next seven years.
From April 2025 to March 2026 alone, water companies are set to spend a record £20billion.
COMPENSATION ALREADY DUE
It comes as water companies face criticism over record levels of sewage discharged into rivers and seas despite huge profits.
At the beginning of October, water companies were ordered to return £157.6million to customers after failing to meet pollution targets.
Each year, Ofwat evaluates the performance of England and Wales‘ 17 largest water and wastewater companies against key targets, including sewer flooding, supply interruptions, and water leaks.
For the second consecutive year, no company attained the highest rating, although four companies demonstrated improvement compared to the previous year.
As a result, millions of customers at 13 water companies will see their bills slashed next year as the watchdog issues fresh penalties.
The penalties for each water firm are as follows:
- Thames Water £56.8million
- Anglian Water: £38.1million
- Yorkshire Water: £36million
- Southern Water: £31.9million
- Welsh Water: £24.1million
- South West Water: £17.4million
- South East Water: £8million
- Wessex Water: £5.3million
- Affinity Water: £5.2million
- Bristol Water: £1.9million
- Portsmouth Water: £1.1million
- South Staffs Water: £700,000
- Hafren Dyfrdwy: £200,000
The regulator said that the amount returned to customers will be applied to bills from April 2025.
Water companies were set stretching targets for 2020-25 to deliver better outcomes, for both customers and the environment.
Where they fall short on these, the regulator imposes performance penalties resulting in customers being charged less than they would be the following billing year.
Performance penalties have totalled more than £430million since 2020.
Last year, Ofwat forced through bill reductions worth £177.6million.
On Thursday (December 19), Ofwat will confirm how much water companies are allowed to hike bills over the next five years.