Water firm’s new plans
THAMES Water could be raising household bills further to cover “environmental” projects following the defaulting of its parent company.
Earlier in April, Kemble Water, which took on Thames Water in 2006, failed to meet a deadline to pay interest on a number of debts, totalling around £400 million.
On Tuesday, April 2, the firm announced that it was unable to make the payment, and asked for further extension on a payment of £19 million due by the end of the month.
It followed the witholding of critical funding by shareholders at the end of March after Ofwat, the water regulator, described Thames Water’s plans as “uninvestable.”
Plans for the largest ever investment program by a UK water company, equal to the
£18 billion of debt faced, were drawn up, and shareholders pledged to “take no cash out” of the business until further improvements were made to its finances.
Since Ofwat has been unprepared to provide “necessary regulatory support” for the business plan, however, they subsequently withheld the funding.
Ofwat rejected proposals for £18.7 billion of investment by Thames Water before 2030, which also included a 40% increase to customer’s bills on top of inflation.
This means the heavily indebted water firm is now seeking different ways of funding plans for spending of more than £1 billion on environmental measures.
It is looking to allay criticism of water leaks and sewage spillages into waterways while also tackling more then £15 billion in debts.
On top of its original plans, the water firm is now seeking to spend an extra billion, with the potential for another £2 billion of investment.
This could see consumer bills rising by as much as 44% in total, with the average bill potentially reaching £627.
While the investments are proposed to cover “environmental projects,” no further details have been laid out.
Thames Water has submitted a request to Ofcom, which is set to make a decision on the matter in a meeting set for Thursday, May 23.
It is thought the company’s debts are equivalent to about 80% of the value of the business, the most indebted of any water providers in England and Wales.