On a day when energy firms announced that bills would rise by less than expected, the UK's largest water company proposed price rises of £8 a year plus inflation for five years from 2015.
If the water regulator Ofwat approves the plans, the average bill for Thames's 14 million customers will rise to £398 before inflation in 2020, compared with £358 today.
Thames Water, which provides water and sewerage services from Kent to Gloucestershire, revealed its intentions on Monday as water companies submitted their five-year business plans to Ofwat.
Severn Trent, Anglian Water and Wessex Water all pledged to keep bill rises below inflation until 2020, while Yorkshire Water said it would keep charges in line with retail prices.The regulator, which rejected a Thames bid to put bills up by 8% in 2014-15, will give feedback on these plans next April, but will not make a final decision until January 2015.
Jonson Cox, Ofwat's chairman, said: "Ofwat challenged companies to listen carefully to their customers in preparing their plans. Our board made clear that current economic circumstances gave companies an opportunity to deliver falling bills in real terms over the coming five years while maintaining substantial ongoing investment."
Martin Baggs, Thames Water's chief executive, defended the above-inflation rises, arguing that London's Victorian waterworks and sewer tunnels needed to be upgraded. The Thames Tideway tunnel, a 16-mile (25km) sewer from Acton to Abbey Mills, is intended to prevent raw sewage flooding into the Thames during heavy rain.
"The Thames Tideway tunnel is a huge 'must-do' project to stop tens of millions of tonnes a year of sewage entering the tidal river Thames," Baggs said. "The current situation is simply unacceptable, which is why this project – developed over many years – has cross-party support and forms part of the government's National Infrastructure Plan."
Critics – including a former Ofwat director general – have accused Thames and the government of failing to investigate cheaper and greener alternatives to the supersewer.
Sir Tony Redmond, London and south-east chair for the Consumer Council for Water, said Thames Water's sewer charges raised concerns over the one in eight customers who already struggle to pay their bills. He added: "The £40 charge [over 2015-20] is not the complete picture. The actual construction work will not finish until 2023, so there will be more to come."
The proposed charges come days after Thames Water revealed that it does not expect to pay any corporation tax for up to a decade. Announcing a 19% surge in pre-tax profits on Friday, Thames Water said that infrastructure investments of £1bn a year over the next decade would allow it to defer £20m a year in tax liabilities.
The company, owned by a consortium led by the European arm of the Australian banking group Macquarie, has faced repeated accusations of ripping off the taxpayer by not paying corporation tax in recent years.
Source: theguardian.com
Author: Jennifer Rankin
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