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Water regulator Ofwat has placed Thames Water into a special “turnaround oversight regime” that will require the struggling utility to overhaul its latest business plan.
The move by Ofwat came as the regulator rejected the steep increase in household bills that Thames Water said is needed to help attract critical new funding from investors and overhaul its ailing infrastructure.
In its long-awaited ruling on the company’s latest business plan, Ofwat said that Thames Water can raise household bills from an average of £436 this year to £535 by 2030, well short of the £627 that the utility had sought.
Ofwat, which has faced criticism for being too lenient on the UK’s largest water company, said it was stepping up its supervision given “our concerns over the performance of the company”.
As part of the regime, Thames Water will be required to provide a “delivery action plan” and show how it will deliver the “necessary step change in performance”.
Thames Water, which provides water and sewage services to about 16mn households, has become a lightning rod for criticism of the sector.
Ofwat’s verdict on the company’s business plan came alongside those submitted by the 15 other companies that supply water and sewage services across England and Wales.
Since the water industry was privatised three decades ago, water companies have been required to submit business plans to the regulator every five years that set the returns they can make.
Announcing Ofwat’s long-waited determination on Thursday, chief executive David Black said: “Our draft decisions on company plans approve a tripling of investment to make sustained improvement to customer service and the environment at a fair price to customers.”
The crisis at Thames Water deepened in March when its shareholders backtracked from a plan to inject £500mn and branded the utility “uninvestable”.
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