Thames Water has put forward new plans to increase spending and investment in its network, but warns this could see customer bills soar by 44%.
The group, which is struggling to survive under a mountain of debt, has proposed investing an extra £1.1 billion and revealed potential further investments of £1.9billion into its network as part of their new approach submitted to industry regulator Ofwat. Thames Water supplies water to 16 million customers across London and the Thames Valley region.
The utlity giant unveiled its five-year plan extending to 2030 which outlines increased expenditure amounting to £19.8billion that would be used primarily for environmentally-friendly schemes. The implementation of the proposed increased spending would likely cause bills to shoot up over the five-year period, roughly lining up with previous proposals for a 40% rise.
However, the suggested additional £1.9billion investment would see the average customer bill further inflate by around £19 over the same period an increase of around 44%. IIf Ofwat approves these plans in full, customer bills could eventually climb up to £627 annually by 2030.
Addressing the publication of the new plan, Thames Water chief executive Chris Weston stated: "Our business plan focuses on our customers' priorities. As part of the usual ongoing discussions relating to (the business plan), 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."
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Thames Water is restructuring its business model to avert a potential collapse under a £15billion debt load. Its investors are reluctant to inject the capital necessary to bridge a funding gap, leading to speculation that the Government may effectively nationalise the company, thereby passing the weighty debt to taxpayers.
Thames had first attempted to hike customer bills by 40% to aid a proposed £18.7billion investment programme, published earlier in October. However, Ofwat's regulation over this plan made it "uninvestable", leading shareholders to rescind last-minute emergency funding of £500million scheduled for payment at April's end.
As of February, the company reportedly had £2.4billion cash on hand, enough liquidity to keep it afloat till next year. Negotiations are said to be ongoing among current shareholders including the Universities Superannuation Scheme (USS), the sovereign wealth fund of China, a Canadian pension fund, and the BT Pension Scheme.
An initial decision on the proposed new business strategy, dubbed PR24, is due from Ofwat on June 12. There are claims that Thames Water is preparing to negotiate with lenders to fund a five-year spending outline, potentially securing a new loan.
Beyond the mountain of debt, the company has also failed to meet targets related relating to sewage spillage and leakage. Following extensive discussions with regulators and key stakeholders regarding its initial business plan, Thames Water submitted revised plans that potentially lead to higher bills for customers.
Liberal Democrat Treasury spokeswoman Sarah Olney said: "It would be an absolute disgrace if customers are forced to foot the bill for Thames Water's shambolic failings. Ofwat cannot allow these bill hikes to go ahead." Her party plans to introduce a bill in Parliament on Monday that would bring Thames Water under special administration with immediate effect.
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