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Water bills frozen until 2015 as Ofwat bans Thames rises
Jonathan Prynn and Benedict Moore-Bridger23.07.09
Thames Water's proposed 17 per cent increase was thrown out by Ofwat
Londoners' water bills are to be frozen for the next five years it was announced today.
Proposals from Thames Water to raise them by 17 per cent to an average of £356 a year were thrown out by industry regulator Ofwat.
Instead the company will be allowed to add just £1 to the current average bill of £303 by 2015 and has been told to become more efficient.
Ofwat chief executive Regina Finn said: "We understand times are hard and we have listened to what customers have told us. They want safe, reliable water supplies at a reasonable cost."
Thames reacted furiously claiming that bills were already "unsustainably low" and that Ofwat's decision would force the company to slash its programme of replacing Victorian mains by almost half.
The company said this would increase the risk of burst pipes and would stop it making any further in-roads in the amount of water lost to leaks.
Thames also said it would not be able to do as much work as it planned on reducing sewage flooding in homes. Instead of protecting 2,300 properties it would only have enough money to work on 1,900.
In total Thames's investment plans over the five years from 2010 to 2015 have been cut by £900million from £5.5billion to £4.6billion.
Today's draft decision by Ofwat, which will be finally confirmed in November, means water bills could even go down slightly next year if the RPI measure of inflation remains below zero.
It will be the first time that Thames Water customers have seen a fall since privatisation in 1989.
But Thames Water bosses could not hide their dismay at the severity of the cutbacks ordered by Ofwat, which decides every five years how much water companies should be allowed to increase bills.
David Owens, chief executive of Thames, said: "We've said all along: a tough decision for Thames is simply a tough result for customers. We'll be working with the regulator to achieve the best result for our customers at the final determination in November.
"There have been significant cuts to two areas that Thames Water customers give the highest priority - reducing leakage by replacing worn-out, cast iron water mains and preventing sewer flooding in people's homes.
"Ofwat has almost halved Thames Water's proposed water mains replacement programme.
"This means no reduction in leakage will be made over the next five years, raising concerns that bursts may increase."
Reader views (15)
Water, Gas, and Electricity should be a national service by the State; to all the people of the nation; these are essential services and should not be used for making profits out of, for private companies or shareholders of companies etc.
We did have it that way; till they were all sold off cheap by Thatcher; and New Labour failed to get the utility companies back, when they came to power; more shame on them; you expect a Tory to rob you blind; but not a Socialist.
Still; know we all know where we stand with our politicians and government; expect air to be charged for once they find a way to do it; and I bet our air will either belong to the Germans or the French once that is sold off as well.
- Mickinlondon, london.
Having worked in the industry for the past 20 years I applaud OFWAT's decision, at last it has found its teeth and grown some! Thames water like so many of our other water companies have since privatization, become financial mechanisms to raise money for financial investors, pension funds and over paid executives etc. One only has to visit treatment works and other facilities across the channel to see that investment is being properly ploughed back into the assets used for the true function of treating waste and processing water. On returning to the UK you can see the lack of investment over the last 20 years, more annoyingly you wonder where all the taxpayers’ money disappeared and no, it was not on the infrastructure. Let’s see the water companies being forced to spend the money on the assets, not holding the AMP funding within the banks to pay shareholders higher dividends and impose much higher fines for non compliance.
- Anon, Berkshire
Just to add balance - not that I work in the industry - but I suspect the comments above come from people who deplore flushing storm sewage into the Thames. Stopping the payment of dividends would add back perhaps 30% of the capital spend - where does the rest come from if not us customers? And do Londoners want the Olympics to have water & sewage treatment? Oh, and James, the French companies you refer to own water companies around London that have been private for over 130 years; Thames is owned mainly by pension funds just like the one he has - what does he think they do with his money?
- Peter Bench, London
Anon of London is talking complete codswallop. Thames, and all other water companies, will install a water meter on request, except where it is impossible - such as where several flats use the same water supply. If that's the case, one is offered an assessed charge at a maximum of £284 a year. Either way, it pays most people to ask for a meter - and get one. Takes about three months for all the paperwork and installation. One can even apply online, so, Anon, suggest you look at the Thames web site.
- Ken, Brighton, East Sussex
So how much does Thames water pay to the environment for the water it takes process and sells?
I be nothing.
- Ken Wood, Abingdon, OXON, UK
Perhaps now th eutiliies in teh uK wont keep funding the infrastruture in Germany and France. Next the mobile phone networks that we fund in Fance, Germany, and Spain.
- Duncan, Kent
I beleive this lot are French, and these increases would never happen in France, the public would never satnd for it.
Demand water from other supplies through the same pipe, just like telecoms, write to Ofwat and demand they make this happen now, rather than their flacid support of a monopoly supplier.
- James, London
About time. I used to be on a water meter. When I was looking to move, I asked Thames Water about probable costs in my new home and was told a meter would be installed and therefore to budget for the same monthly amount. I used that information in working out whether I could afford the possible new home. Once I moved, Thames Water refused to install a meter and charged me just over three times my previous monthly amount. I wish the government would hurry up and force the water companies to install meters.
- Anon, London
Finally someone does something in this country!!!!!!!!!
- Jc, London
Good! Please do the same with gas and electricity.
- Pt, London
Bob, you must have been reading my mind!
- Kaz, London
They are frozen simply because the company had been raising the rates far too much to begin with
- Keith Price, Luton, England
What other Company do you know can simply put up its prices by 17% because its infra structure / Machinery is knackered, but at the same time pay dividends to its so called investors of £100 million plus.
The only kind of Company to be able to do this is one with a monopoly, what was the point of selling these companies off, there is only 1 water pipe going into my house and 1 waste pipe going out, I do not have a choice, I just sit back and watch my Direct Debit increase each year.
- Steve M, London
How many years has it been that Thames Water first spun the yarn that without swingeing price increases, they wouldn't be able to make infrastructure investment ? Like all their privatised utilities singing from the same hymmsheet, the line gets dished at the beginning of each, nothing gets done and then by year eend, all the extra revenue ends in the shareholders pockets with minimal investment made.
So well done Ofwat for once standing up for the customer
- John, Twickenham
Shouldn't the headline read "OFWAT does something for once"?
- Bob, Cheam
