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 available cash of £2.4bn as of March, enough to keep it solvent for the next 15 months.
Thames Water is surrounded by holding company Kemble, which has a £190m loan due to be refinanced by the end of this month, but the group has already said it will not be able to repay the debt. I'm warning you.
Thames Water 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.
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 its updated business plan had been developed after discussing its original business plan “extensively with regulators and key stakeholders” including the Department for Environment, Food and Rural Affairs (Defra) and the Environment Agency. .
A Defra spokesperson said: “Customers cannot be expected to pay the price for Thames Water's poor performance, which is why Ofwat must do everything in its power to protect customers and ensure they get value for money.” Stated.
“As with all water company plans, this is not yet final and Ofwat will now independently review this latest version to ensure it is delivered to customers and meets the company’s legal requirements and government targets. We plan to make sure that
Liberal Democrat Treasury spokeswoman Sarah Olney said Thames Water's plans would funnel “more money down the drain”.
She said: “It would be an absolute shame if customers were made to pay the price for Thames Water's disastrous failure.”
Mike Keel, chief executive of Consumers' Council for Water (CCW), said: “The fact that only 16% of customers thought the rate increases proposed in the company's five-year plan were affordable Don't miss it.”
Gary Carter, national director of the GMB trade union, called on the company's shareholders to “fork out to give the company a chance to change direction”.
