15 Aug 2013
Thames Water has asked Ofwat to consider increasing the limits on the prices it can charge its customers.
In 2009 Ofwat set price limits on prices for the period 2010 – 15. Thames said that it has experienced changes to certain specific costs that were not anticipated by Ofwat, when price limits were set.
The regulator’s 2009 decision means Thames already has an allowance to increase its charges by 1.4% above inflation in 2014/15. Thames has indicated that this new application would add around a further 8% – around £29 – to the average household bill. The current average Thames household bill is around £354.
Regina Finn, Ofwat Chief Executive said: “We know that household incomes are becoming ever more stretched – nobody wants to see any unnecessary increase in bills. We have made it clear to companies that we expect them to talk to their customers, listen to them and take account of their customers’ views.
“We will challenge these proposals and question the company strongly on their reasons. Proposed increases will only be allowed if they are fully justified.”
Thames say increases in its costs are because of:
- increases in bad debt costs above what was allowed in 2009 price limits, specifically additional bad debt due to the economic downturn;
- the impact of the transfer of private sewers;
- Thames tideway land purchase costs above what was allowed in 2009 price limits; and
- increases in Environment Agency charges above what was allowed in 2009 price limits.
Ofwat expects to make a final decision by November 2013. Any revisions to price limits would not apply to customers’ bills before April 2014