Thames Water has been given a dressing down by the regulator for not doing enough to keep future bills affordable and to sort out its poor performance on leaks.
Britain’s biggest water company had appeared to indicate it was planning significant bill hikes in future years.
Ofwat said it had “substantial concerns” about some aspects of Thames Water’s latest five-year business plan, and that as a result it would face increased regulatory scrutiny.
The regulator added that Thames Water and three other companies – Southern Water, Affinity Water and Hafren Dyfrdwy – would have to substantially rework and resubmit their plans for 2020-25.
By contrast, three firms – Severn Trent, South West Water and United Utilities – were praised for setting out how they would cut bills by up to £70 and deliver real progress in other areas such as cutting leaks.
In its assessment of Thames Water’s plans, Ofwat noted that the company had admitted “the reality that things haven’t gone as well as planned in recent years”.
The regulator gave the company’s plans a D rating – the lowest possible – in three areas, and was critical of its plans relating to long-term affordability. Ofwat said Thames Water was forecasting “the highest long-term bill increase in the sector” for the 2025-30 period.
It added that on tackling leaks, Thames Water’s plan committed to a 15% reduction, “but given the company’s current poor performance, we think the company should be pushed to go further”.
Ofwat said: “Given the extent to which the plan falls significantly short of high quality and the material interventions required to protect customers, we have placed Thames Water in the significant scrutiny category.”
It emerged that the three companies praised for their business plans had proposed real-terms bill reductions of between £18 and £73. These were the differences between projected 2019-20 and 2024-25 prices.
Steve Robertson, the chief executive of Thames Water, said the group was disappointed with Ofwat’s announcement: “We are seeking Ofwat’s permission to invest more in areas where we know it is needed. Instead, it appears that we are being asked to reduce our current levels of spending.
“We are concerned that this will make it harder to meet the needs and expectations of our customers, amid the challenges of population growth and climate change.”
