Water companies are planning to increase prices further for households, according to industry regulator Ofwat.
Chief executive David Black said suppliers want bills to rise to fund infrastructure investment despite the sector coming under increased scrutiny over financial uncertainty, dividend payouts and environmental failures.
It comes as the UK’s largest supplier, Thames Water, continues talks on fresh funding to secure its long-term future as it faces pressure over its roughly £14bn debt.
The head of Ofwat defended the watchdog’s performance in an interview on BBC Radio 4’s Today programme on Wednesday and said customers will not be made to cover the cost if Thames collapses.
Black admitted there has been some reluctance on the part of current Thames Water investors to stump up fresh equity but rejected suggestions that it will hit customers.
Asked whether customers will have to pay if Thames fails to secure new funding, he said: “No. The provisions are there to impose what’s called a special administration, and so this is a form of an insolvency process but it’s designed to protect the interest of customers, and services will be maintained.
“That’s the backstop option of a special administrator being appointed but we are still a long way from that position.”
He said the company has £4.2bn in cash and credit but is looking to secure further financing by early next year.
There are growing concerns companies could increase bills by as much as 40 per cent, adding to the burden on households who have already witnessed surges in their energy and food costs.
Black admitted that suppliers are seeking further rises.
“We expect companies will request increases in bills at the next price review to fund larger investment programmes and those programmes will deliver improvements to the environment,” he said.
Press Association – Henry Saker-Clark