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Troubled Thames Water has unveiled new plans to increase spending and investment on its network, but warned that this could cause customers' bills to jump by as much as 44%.
The group, which is struggling to survive amid a funding crisis, has proposed increasing spending by £1.1bn and may invest a further £1.9bn into its network as part of a new business plan, regulator Ofwat said. revealed.
The utility giant, the UK's largest water company with 16 million customers in the London and Thames Valley area, will increase its spending to £19.8 billion in its new five-year business plan to 2030, with the surplus going to the environment. He said the money would be used for the project.
This increase in spending will cause bills to increase roughly in line with previous plans for a 40% increase over five years.
However, it added that the potential additional investment of £1.9bn would increase the average customer bill by a further £19 over five years, or around 44%.
If Ofwat gives the green light to the entire scheme, customers' bills will rise to £627 a year by 2030.
Chris Weston, chief executive of Thames Water, said:
“As part of our regular ongoing discussions on the (business plan), we have updated the plan to deliver more projects that benefit the environment.
“We will continue to discuss this matter with regulators and stakeholders.”
Thames Water is facing collapse under the weight of £15bn of debt and is being forced to rethink its business plan to avoid collapse.
Investors have refused to inject the money needed to fill the funding gap, and reports suggest the government is working on plans to effectively nationalize the water giant. .
If that happens, taxpayers will be burdened with huge debts.
Thames Water originally wanted to increase customer bills by 40% to fund an investment program worth £18.7bn under plans announced in October.
But the company said Ofwat had imposed restrictions on the scheme, making it “uninvestable”, and shareholders withdrew a £500m emergency funding package that was due to be paid out at the end of April.
The company had £2.4bn of cash in February, enough to keep it solvent until next year.
The company is said to be in ongoing discussions with existing shareholders, including Universities Superannuation System (USS), China's sovereign wealth fund, Canada Pension Fund and BT Pension Plan.
Ofwat is expected to make its first decision on the draft business plan, known as PR24, on June 12.
It would be an absolute shame if customers were made to pay the price for Thames Water's disastrous failure.
Sarah Olney, Liberal Democratic Party Treasury Spokesperson
Thames Water is reportedly preparing to approach lenders to fund a five-year spending plan, meaning it could take on new financing.
Not only is the company saddled with huge debts, but it has also come under intense scrutiny after failing to meet targets for sewage spills and leaks.
The company said the updated business plan was created after “extensive discussions with regulators and key stakeholders” about the original business plan.
Liberal Democrat Treasury spokeswoman Sarah Olney said: “It would be an absolute shame if customers were made to pay the price for Thames Water's disastrous failures.
“Ofwat cannot afford to allow these bill increases to continue.”
He said the Liberal Democrats planned to introduce a bill to Parliament on Monday that would put Thames Water under special administration with immediate effect.
