Thames Water Bill Hike Criticised By Regulator

Planned price hikes by Thames Water could be reversed after the industry regulator attacked the company's performance and its demand for extra money.

Thames Water wants permission for a one-off bill increase of up to 8% in 2014/15, arguing that it has to fund the construction of a 'super sewer' under London.

But Ofwat has turned the tables on the company, saying Thames Water has failed to deliver on several fronts and investigating whether it needs the money after benefiting in recent years from the ultra-low cost of lending for corporations. 

It said Thames Water, which has 14 million customers, has made "substantial savings" by doing less than expected to tackle sewer flooding.

A major investment programme in sewage treatment has also dragged on too long, it added, despite customers being charged for the improvements.

And it said some of Thames Water's sewerage network is not hitting performance targets.

Mogden water treatment works in London are operated by Thames Water

Ofwat chief regulation officer Sonia Brown said: "We have been clear that we would challenge Thames' proposed bill increase.

"So we are looking to see if there are areas where we can claim money back for customers."

The average Thames Water household bill is around £354 a year.

Ofwat also launched a separate probe into whether the company, owned by Australia's Macquarie Group, has "benefited from wider economic circumstances beyond its control".

The probe is believed to centre on whether Thames Water has gained from the ultra-low interest rate environment, reducing the cost of servicing its huge debt pile.

It could deduct gains from Thames Water through a process called the "favourable effect mechanism" - although Ofwat said it is too soon to say whether this may result in lower bills for customers.

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