UK water companies are in the process of updating the regulator with their business plans, with a final determination due in December. — Bloomberg
LONDON: Thames Water Utilities Ltd says it will have to raise bills by as much as 59% by the end of the decade, as the heavily indebted utility races to attract investors to stay afloat.
The UK’s biggest water and sewage-services provider also determined that cuts proposed by its regulator will stop it from raising much needed equity, according to a revised five-year business plan released on Wednesday.
The scale of the cuts proposed by Ofwat “is not tenable and renders our plan uninvestible,” Thames said in a statement accompanying the release.
UK water companies are in the process of updating the regulator with their business plans, with a final determination due in December.
Thames, which serves a quarter of England including London, desperately needs to find £3.3bil of equity and is poised to start seeking new investors in the coming weeks before it runs out of money at the end of May.
It initially asked Ofwat for permission to hike customer bills by 40% and invest £22bil by the end of the decade in order to fix chronic leaks and sewage spills and develop new water supplies.
Last month, Ofwat rejected those plans, saying instead it could only spend £16.8bil – less than proposed. It also said average bills could only rise by 23%.
Now Thames says it has redone the numbers and needs £900mil more than thought.
It also realised customer numbers will be lower than expected, meaning each household would need to pay more.
It is projecting an average bill increase in the range of 52%-59% by 2030.
“On the basis of the draft determination given to us by Ofwat, both our own and independent analysis shows that our plan would be neither financeable nor investible and therefore not deliverable,” CEO Chris Weston said in a statement.
“It would also prevent the turnaround and recovery of the company.”
Thames also asked Ofwat to raise the allowed return on equity from its proposed 4.8% to allow for better reward to the company’s investors.
The utility has asked for it to be as high as 5.7%.
Ofwat will consider Thames’ comments over the next three months alongside other organisations, including water companies, customers, environmental and consumer organisations, and investors, a spokesperson for the regulator said. — Bloomberg
