Water bills are set to rise by 35% on average for households in England by the end of the decade as UK suppliers ramp up investment to expand and fix leaky networks.
(Bloomberg) — Water bills are set to rise by 35% on average for households in England by the end of the decade as UK suppliers ramp up investment to expand and fix leaky networks.
Companies plan to invest £96 billion ($117 billion) in the five years to 2030 for a series of projects, and will seek permission from regulator Ofwat to increase household bills. The plans include ten new reservoirs – there hasn’t been a new development in Britain since 1991. The utilities want to triple investment in reducing sewage spills, and cut leakage by more than a quarter by 2030, according to a statement by the industry association WaterUK.
All UK water companies are required to submit spending plans to Ofwat by noon on Monday. The regulator will scrutinize the proposals to ensure they deliver value for money and are adequately funded. Ofwat has told companies they won’t be allowed to use bill payers money to fix past mistakes. Final plans will be agreed by Ofwat in December 2024 with changes to bills taking effect from April 2025.
The investment program would almost double current levels and would be the largest ever, WaterUK said. The industry has been embroiled in a crisis this year as mounting calls from the public and politicians to clean up UK waterways coincided with soaring debts in some of the biggest suppliers, including Thames Water Plc and Southern Water Ltd.
“While increasing bills is never welcome, this investment in our country’s infrastructure is essential to ensure the security of our water supply,” said Water UK, Chief Executive, David Henderson.
Raising bills won’t sit easily with consumers grappling with a cost-of-living crisis and frustrated with decades of underinvestment. But seeking equity funding is also difficult. While Thames investors agreed to put in £750 million in July to help stave off a temporary takeover by the government, more money is needed.
Severn Trent Plc said on September 29 it will need to raise £1 billion in equity to help finance £12.9 billion of expenditure.
The average annual bill will rise to £575 in the financial year 2029/2030 from £425 for England, according to a spokesman for WaterUK. Water companies will double the number of homes that are eligible to receive financial support with their bills, according to the statement.
Thames and Southern were named last week as the industry’s worst performers by Ofwat, which imposed penalties on both because of a failure to meet delivery targets.
Environment Secretary Thérèse Coffey, urged Ofwat to examine the plans carefully to ensure customers do not “pay the price for poor performance.”
–With assistance from Eamon Akil Farhat.
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