Thames Water risks £500m shortfall after April bill hike as vulnerable customers fall behind on payments
Hundreds of thousands of Thames Water’s customers are at risk of falling behind on their utilities bills when prices rise in April, according to research from Outra.
It predicts Thames Water could now face a shortfall of up to £512m in unpaid bills over 2023 because financially vulnerable households using the suppliers are in danger of falling behind on payments.
Thames Water has warned its 15m customers to expect an 11.6 percent increase on their water bills from April to account for inflation and adjustments for their past performance.
The data science company has calculated that the water supplier’s average monthly water bill of £50 could pose an issue for over 854,000 households within its catchment area.
Peter Jackson, chief data and product officer at Outra said: “Unlike gas or electricity bills, water companies cannot, by law, disconnect the water supply of domestic customers. As a result, consumers are more likely to fall behind on water bills than other utilities, meaning Thames Water will likely experience an extensive financial shortfall over the next twelve months.”
When approached for comment, a Thames Water spokesperson said: “We know the cost of living is taking its toll and with the rise in inflation more of our customers will be struggling to pay their utility bills. We’re already helping our customers – we’ve raised the minimum threshold for those who are eligible for our existing social tariff, WaterHelp and we are creating a new scheme intended to go live in May to further support households that are struggling.”
Thames Water confirmed it will provide support for 53,000 additional households in the billing year 2023-24, taking the total helped to 384,000 households and has announced increased financial support for customers to a value of £110m this financial year.
The supplier also disputed Outra’s calculations that its average bill was £50 per month – it said the average bill was currently £38 per month.
The latest increase in water bills coincides with the government’s planned rise in the energy price guarantee, meaning households can also expect to be paying more per unit for gas and electricity.
The cost-of-living crisis is putting increased pressure on vulnerable households who are at risk of falling behind on rising water and energy bills this spring.
Chancellor Jeremy Hunt is set to announce his “slimmed down” spring budget on 15 March, and will be expected to outline multiple policy changes, including a £900 cost of living payment package for means-tested benefit claimants.
Thames Water is currently facing enforcement action from Ofwat over unauthorised sewage spills and was told last November to hand back over £50m to its customers after missing key performance targets.
It also posted nearly £400m in profits for the six months to September 2022, despite the firm grappling with a jump in leaks during the scorching summer.