The utility giant, Britain's largest water company with 16 million customers in the London and Thames Valley area, said its new business plan for the five years to 2030 will see spending increase to £19.8 billion.
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Thames Water has set out new plans to increase spending and investment on its network, warning that this could lead to customers' bills rising by as much as 44%.
The group, which is struggling to survive under a mountain of debt, has proposed an additional £1.1bn of investment and a further £1.9bn for its network as part of a new approach lodged with industry regulator Ofwat. revealed that there is a possibility of investing in Thames Water supplies water to her 16 million customers in London and the Thames Valley region.
The utility giant has published its five-year plan to 2030, outlining a £19.8bn increase in spending that will be mainly used for green schemes. If the proposed spending increases go into effect, bills would likely rise sharply over five years, roughly in line with the previous 40% increase.
However, the proposed additional investment of £1.9bn would mean average customer bills would rise by an additional £19 over the same period, or around 44%. If Ofwat fully approves these plans, a customer's bill could ultimately reach his £627 a year by 2030.
Announcing the new plan, Thames Water CEO Chris Weston said: “Our business plan is focused on our customers' priorities. We have now updated our plans and we will continue to discuss further projects with regulators and stakeholders that will benefit the environment.”
Thames Water is restructuring its business model to avoid possible collapse with £15bn of debt. Investors have been reluctant to inject capital needed to fill the cash gap, leading to speculation that the government will effectively nationalize the company, thereby shifting large amounts of debt to taxpayers.
Thames had initially sought to increase customer bills by 40% to support a proposed £18.7bn investment plan announced in early October. But Ofwat's restrictions on the scheme made it “uninvestable” and shareholders canceled at the last minute a £500m emergency funding that was due to be paid at the end of April.
As of February, the company reportedly had £2.4bn of cash on hand, giving it enough liquidity to keep it afloat until next year. Negotiations are said to be underway between current shareholders including Universities Superannuation System (USS), Chinese sovereign wealth fund, Canada Pension Fund and BT Pension Plan.
The first decision on the proposed new business strategy, known as PR24, is expected to be taken by Ofwat on June 12. There are claims Thames Water is preparing to negotiate with lenders to fund a five-year spending outline and could secure new financing.
Not only is the company saddled with a mountain of debt, but it is also failing to meet its targets regarding sewage spills and leaks. After extensive discussions with regulators and key stakeholders regarding its original business plan, Thames Water has submitted amended plans that may result in increased charges to customers.
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 rate increases to continue.” he said. The party will introduce legislation on Monday to put the River Thames under special control with immediate effect.
