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The UK’s water regulator Ofwat will allow utilities in England and Wales to increase customer bills by an average of 36% by 2030, a bigger increase than previously forecast, but still less than the increase demanded by struggling companies such as Thames Water.
Ofwat has published a bill to strengthen the “final decision” on a series of complex measures and metrics governing Britain’s privatized water companies over the next five years.
David Black, chief executive of Ofwat, said: “Water companies now need to rise to this challenge, customers will have good reason to expect them to demonstrate they can deliver improvement significantly over time to offset bill increases.”
The regulator was also fined Thames Water £18m after it was discovered that the company’s dividend payments last year breached licensing conditions.
The bill increase is higher than the average 21% increase that Ofwat said it would allow earlier this year. The increase means bills will increase by an average of £31 a year before inflation between now and 2030.
Thames Water will be allowed to increase its bills by 35%, far less than the 53% increase demanded by the near-insolvent power company.
Water companies have been locked in negotiations with Ofwat over how much they can increase bills between 2025 and 2030. The industry has pushed for sharp increases, saying they are needed to grant Investment capital in weak infrastructure.
Since the privatization of the industry in 1989, water companies have had to reach an agreement with the regulator every five years on bill increases, how much they can invest and the returns that investors Theirs can be earned.
The long-running crisis at Thames Water has threatened to drive investors away from the industry, raising stakes for Ofwat. Thames Water, the UK’s largest water company, has warned that an adverse ruling would jeopardize efforts to raise new capital from investors.
This is a developing story
