Water regulator Ofwat will block an eight per cent rise by Thames Water, according to it's draft decision published on Wednesday. The regulator is responsible for setting prices for the water companies every five years and would only allow an above inflation price rise of 1.4 per cent for 2014/15. The price increase will come into effect in April next year.
Ofwat's chief regulation officer, Sonia Brown, said:
We said we would challenge Thames Water's request. We have looked at the details and do not believe the current evidence justifies an increase in bills.
The draft decision will be followed by a consultation, with the final decision will being taken in November. The price rise proposed by Thames Water would have amounted to an extra £29 on the average household bill water bill. Thames Water is owned by the consortium Kemble Water and provides services to 14 million households in and around London.
The company attributed the need for the price rise to extra costs totalling £291m. The costs included bad debts, the transfer of private sewers, land purchases and increased Environment Agency charges. Thames Water is the only one of the 18 regulated water companies to have applied to the regulator for a price increase ahead of the next pricing review.