Water bills to ‘rise by at least 40%’ as Thames Water shareholders pull funding over regulations

By Oliver Monk

28th Mar 2024 | Local News

Thames Water's Hogsmill site near Kingston upon Thames (Photo: Ollie G. Monk)
Thames Water's Hogsmill site near Kingston upon Thames (Photo: Ollie G. Monk)

Families across south-west London could see their water bills rise by 40% after company shareholders go back on funding agreement.

Last July, Thames Water execs agreed to provide £500m by 31 March 2024 to make key infrastructure improvements across their network and prevent nationalisation.

However shareholders have pulled the funding, blaming regulator Ofwat in an announcement today (28 March) for making their previous business plan "uninvestable".

Reports reveal the company is negotiating with the regulator to increase customer bills to make up the shortfall and keep the company "investible for equity investors".

The Liberal Democrats, who have frequently campaigned against Thames Water, say the proposals "could see customer bills rise by at least 40%".

The party have also demanded chancellor Jeremy Hunt promise taxpayers that they will not be liable should the company go bust.

Meanwhile CEO Chris Weston has claimed "it is business as usual for Thames Water."

A sewage dump found in the River Thames 6 March was called an 'environmental hazard' by MP Sarah Olney (Photo: Sarah Olney)

One of its parent companies was paid £37.5m in dividends from profits in 2023, which is currently being investigated by Ofwat for breaching "licence requirements" according to The Guardian.

However, a Thames Water spokesperson said at the time: "Our plans assume no external dividends to shareholders until at least 2030, to support our turnaround."

Later that year, the company was ordered to pay back more than £100m to customers after Ofwat said they were "falling short".

Regulations introduced in May 2023 mean that water companies cannot pay dividends if they don't provide adequate service or damage the environment, as well as face penalties of up to 10% on their overall turnover.

The following month, it was revealed the government was making contingency plans – known as Project Timber – in case Thames Water went under, although they have continued to avoid decisive action despite calls from opposition parties.

Earlier today, local MP Sarah Olney said: "All this could still be avoided if Ministers put Thames Water into special administration immediately and reform it into a public benefit company. 

"That's the best way to ensure this polluting giant will begin working for its customers again."

     

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