THAMES Water yesterday applied to industry regulator Ofwat for permission to raise its prices by eight per cent next year, which would add around £29 to the average household bill.
The water supplier said this would cover a rise in bad debt, increased government charges, costs associated with the 2011 transfer of private sewers to company ownership and land purchase linked to the Thames Tideway Tunnel.
The Macquarie Group-backed firm posted pre-tax profits of £145m last year.
Meanwhile chief executive Martin Baggs was awarded a £418,359 bonus this year on top of his £425,000 salary.
Ofwat – which resets price limits for each water company every five years, most recently in 2009 – will make a final decision on the application by November. If approved, changes would hit customers’ bills as early as April next year.
“We know that household incomes are becoming ever more stretched – nobody wants to see any unnecessary increase in bills,” said Ofwat chief executive Regina Finn. “We will challenge these proposals and question the company strongly on their reasons.”
The Consumer Council for Water has hit out at Thames Water’s plans. “Our research shows that one in seven customers say they can’t afford their water bill,” said Sir Tony Redmond, London and South East chair of the watchdog. “This is reflected in an increasing number of customers defaulting on payments to their water company. Thames Water’s price hike will add to the problem.”
In comparison, a Yorkshire Water spokesperson told City A.M. that it expects its average customer bill to increase by £14 next year, while Southern Water said that it does not anticipate above-inflation bill hikes.