Thames Water launches appeal for larger bill rise

Thames Water has launched an appeal to allow it to increase bills by more than the regulator wants to permit.

The UK's largest utility company is calling on the competition regulator to overturn a decision from the water industry regulator, Ofwat, which caps bill rises at 35% over the next five years.

Thames, which is in severe financial difficulties already, is also waiting for the courts to approve a £3bn rescue from investors.

But in the longer run, the company says bills also need to rise by more than Ofwat has suggested to cover the costs of investing in water infrastructure.

The company, which provides water services in the south-east of England, said the appeal was "in the interests of our customers and the environment".

Thames has argued bills need to rise by 53% over the five-year period.

Its chairman, Sir Adrian Montague, said bigger bill rises would allow Thames to provide "safe and resilient" water supplies that could cope with the impact of climate change.

Other water companies are also permitted to lodge appeals against bill settlements, which are specific for each utility company.

Thames is the first to have done so, while six others have said they will not appeal: Severn Trent, United Utilities, Pennon plus Dwr Cymru Welsh Water, SES and Hafren.

The settlements are designed to balance the interests of consumers with the needs of companies to raise money for investment, and return profits to shareholders.

Separately, Thames Water is under investigation by Ofwat after the company admitted it would not complete more than 100 environmental schemes funded by customers.

The regulator is looking into whether delays to the plans mean Thames has breached its licence.

Critics say water companies have taken too much profit, and built up debt, instead of investing in infrastructure over recent decades, resulting in sewage discharges, burst pipes, and leaks.

Water companies argue that a growing population and the challenges of a changing climate mean higher bill rises are needed.

By challenging Ofwat's bill settlement, Thames kickstarts a review process that could take up to six months to resolve.

In the short term, Thames, with a debt burden of £17bn, is seeking an emergency cash lifeline from investors to shore up its finances.

Mike Keil, chief executive of the Consumer Council for Water, a body speaking for bill-payers, said: "Customers of Thames Water are already facing steep bill rises.

"They will be incensed the company now has the temerity to pursue an even larger increase."

He said customers wanted to see investment and improvements to services, but also expected "value for money and to be treated fairly".