Thames Water Proposes 45% Bill Hike to Fund £21.7 Billion Investment Plan

Thames Water, the UK's largest water company serving 16 million customers, has unveiled plans to increase household bills by up to 45% by 2030. The utility giant is seeking to raise average annual bills from the current £433 to £627 over the next five years to fund a £21.7 billion investment program aimed at tackling environmental issues such as leaky pipes and sewage spills.

The proposed bill hike comes as Thames Water confronts a mounting £18 billion debt pile and faces the prospect of a taxpayer-backed bailout. The government has reportedly drawn up contingency plans, codenamed 'Project Timber,' in the event of the company's collapse. "Customers cannot be expected to pay the price for Thames Water's poor performance," a spokesperson for the Department for Environment, Food and Rural Affairs (Defra) stated, adding that the regulator Ofwat should use its full powers to protect customers and ensure value for money.

Thames Water's original plan for a 40% bill increase was dismissed by Ofwat as 'uninvestable,' leading the company to revise its proposal. The updated business plan now includes an additional £1.1 billion in spending alongside a potential £1.9 billion investment in its network. If approved, this could result in a 44% increase in customer bills by 2030.

Why this matters: The proposed bill hike by Thames Water highlights the challenges facing the water industry in England and Wales, where aging infrastructure and environmental concerns have led to increased scrutiny of water companies. The potential impact on household budgets amidst a cost-of-living crisis has sparked public outrage and political pressure on the government and regulators to intervene.

Ofwat will decide in June whether to allow Thames Water to increase bills to fund its investment plans, a decision that will face intense political scrutiny. The Liberal Democrats have announced plans to table a bill in Parliament to put Thames Water into special administration, with MP Tim Farron stating, "Thames Water needs to be forced to clean up its mess, and the whole system needs reforming." The government has criticized the prospect of higher bills but has indicated no current appetite to intervene directly in the situation at Thames Water.

Key Takeaways

• Thames Water plans 45% bill hike by 2030 to fund £21.7B investment program.
• Thames Water faces £18B debt and potential taxpayer-backed bailout, drawing government concern.
• Ofwat rejected Thames Water's original 40% bill increase proposal as 'uninvestable'.
• Liberal Democrats propose putting Thames Water into special administration to force reforms.
• Government criticizes higher bills but shows no appetite for direct intervention in Thames Water.