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Britain’s water regulator Ofwat will allow utilities in England and Wales to increase their customer bills by an average of 36 percent by 2030. That’s a bigger rise than previously announced, but still falls short of the increases demanded by struggling companies such as Thames Water.
Ofwat announced that the bill increases its “final decision” on the complex measures and metrics that will govern the UK’s privatized water companies for the next five years.
“Water companies must now rise to this challenge. “Customers will rightly expect them to demonstrate that they can deliver significant improvements over time to justify increasing bills,” said Ofwat CEO David Black.
The regulator also imposed a fine Thames water £18 million after the company’s dividend payments last year were found to be in breach of its licensing conditions.
The bill increases are higher than the average increase of 21 per cent that Ofwat announced earlier this year. The increases mean bills will rise by an average of £31 a year before inflation by 2030.
Thames Water will be allowed to increase bills by 35 percent, far less than the 53 percent increase the near-bankrupt utility had demanded.
Water companies are locked in negotiations with Ofwat over how much they can increase their bills between 2025 and 2030. The industry has pushed for hefty increases, saying they are needed to fund investment in ailing infrastructure.
Since the industry was privatized in 1989, water utilities have been required to settle with the regulator every five years on bill increases, the amount they can invest and the return their investors can earn.
The ongoing crisis at Thames Water threatened to scare investors away from the industry, increasing the risks for Ofwat. Thames Water, Britain’s largest water company, has warned that a negative ruling would jeopardize its efforts to raise new capital from investors.
Problems with British water companies and pollution of rivers and coastal areas also sparked public outrage.
Environment Secretary Steve Reed said the public was “rightly angry” about the water industry’s performance and blamed the previous Conservative government.
“They are irresponsibly allowing water companies to divert their customers’ money to line the pockets of their bosses and shareholders,” he said.
The Labor government would “keep the money earmarked for investment so it can never be used for bonuses and shareholder distributions,” Reed added.
