UK water consumers slapped with 21% price hike by Ofwat

11th Jul 2024 07:43

(Sharecast News) - Britain's long-suffering water customers will see bills rise by 21% over the next five years amid a continuing sewage pollution crisis, water regulator Ofwat said on Thursday, adding that it had put Thames Water into special measures over its poor performance.

The draft determination from the regulator for 2025-30 means bills will go up an average £94 with companies told to spend £88bn on upgrading infrastructure to clean up rivers. It is around a third lower than companies had asked for.

"This is mainly because we have challenged companies' view of what they need to spend, and because some companies based their plans on an investor return above the level we think is fair," Ofwat said in a statement.

Ofwat said that Thames, the UK's biggest water company, would be placed in a "turnaround oversight regime" and subject to "heightened regulatory" measures.

A final decision on all rises is scheduled for December.

Thames Water, labouring under £16bn in debts after paying out billions in dividends to investors, was permitted to hit its customers with a £99 increase, having tried to slap them with a £191 rise, despite years of leaking pipes and sewage spills into rivers. The company must regularly report on the progress of its investment plan.

Ofwat said Thames would be allowed to increase bills by £99 to £535, £92 less than the company wanted. Thames, which serves 16 million customers across London and the south-east, asked for a 44% hike in bills.

CAMPAIGNERS OUTRAGED

Environmental campaigners were outraged that consumers were left to foot the cost of infrastructure improvements.

Feargal Sharkey, who campaigns for cleaner water and is the former frontman of the Undertones, was scathing of the Ofwat ruling.

"They are allowing water companies to put up bills by a large amount to pay for infrastructure they should have already paid for with customer bills. Customers are therefore having to pay twice."

"I am now so outraged with the contempt Ofwat is showing to customers that we should be taking to the streets outside parliament to show that we will no longer take their greed, their incompetence and their complete and utter disregard for customers and the environment."

Paul de Zylva, from Friends of the Earth, said the decision on bills and investment "yet again proves that our current form of water privatisation is not fit for purpose".

"It sees water companies pile pressure on Ofwat to allow them to hike customers' bills to subsidise long-overdue investment in our crumbling sewage infrastructure which might cut or prevent some, but by no means all, pollution," he said.

James Wallace, who heads up the campaign group River Action said the price hikes "punish households struggling with the cost-of-living crisis for the abject failure of greedy water companies to invest in their crumbling infrastructure and reduce record sewage spills".

"For decades the industry has put profit before the environment, rewarding its shareholders with billions in dividends, and in the process filling our rivers with human sewage. We must fix this national embarrassment of systemic sewage pollution which has caused environmental carnage to our rivers."

Reporting by Frank Prenesti for Sharecast.com