Ofwat: Thames Water price increase ‘not justified’

The water watchdog Ofwat has refused an application by the UK’s largest water supplier to increase its utility prices by around £29 per household, saying that the proposals were “not justified”.

The application, which was submitted in August, asked that Thames Water be allowed to increase its prices by 8% – an extra £29 on customers’ water bills – to cover the cost of rising debts, fees from the Environment Agency and operation and maintenance.

But on Friday, the regulator Ofwat prohibited the rises, saying that it was for Thames Water to justify the price increases, but that it had failed to do so.

Ofwat’s chief regulation officer Sonia Brown said, “We said we would challenge Thames’ application, in the interests of customers. We did just that and on the evidence provided we are not convinced that an extra bill increase is justified.”

In a statement, Thames Water said, “We will review the decision carefully before deciding on our next steps.”

The news comes amid energy price hikes, which have led to a fierce political row over green levies, wholesale costs and the “oligopoly” within which energy companies operate.

The government responded by urging customers to switch suppliers, but given that water companies are assigned to manage water distribution in localities across the UK, this would not be possible for water consumers.

Last week, Ofwat’s chairman Jonson Cox wrote to all UK water companies asking them to consider whether a price increase was justified, given the mounting pressure that consumers were being placed under.

Water companies across the UK submit price proposals to Ofwat every five years, which is then fixed for that period. Since Thames Water had its prices set by Ofwat back in 2009 however, it claims that the circumstances under which the company was operating had changed, which led to an application for the interim price change.

Further reading:

Thames Water proposes consumer price hike to cover costs

Big six energy bosses grilled by MPs over price hikes

Does saving water make sense?

European institutions pull together to tackle water efficiency