Customers will be hit with higher bills to help Thames Water, interim boss admits
Customers will be forced to foot the bill for improving Thames Water’s creaking infrastructure and poor operational performance, the firm’s interim joint boss admitted today.
Cathryn Ross, interim co-chief executive of Thames Water, told MPs today that there is “no doubt, there is a substantial need for more investment in the sector,” including her company.
She revealed the company has an ageing asset base that are not “as resilient as our customers and the environment would expect them to be,” and that Thames Water is also grappling with challenges around climate change adaptation and population growth, which will put pressure on supplies.
“It is an unfortunate truth that the only source of ultimate funding for that in the current model is the customer,” Ross told the Environment Food and Rural Affairs Committee.
The Thames Water boss ruled out any rises in water bills in the immediate future, with the supplier currently operating in the price control settlement Ofwat established in 2019 which lasts until next year.
However, she did not rule out higher bills for the next price window in 2025, while accepting it was vital the company was as efficient as it could be so that the customer does not “have to pay a pound more than they need to.”
“It’s also important we can access capital markets so we can finance that investment and smooth the cost over decades, rather than having to recover that cost over five years – in which case bills could be substantially higher,” she said.
This follows Ross suggesting a more “progressive charging system for water” should be considered, at a London Assembly Committee meeting yesterday.
She also suggested people with larger gardens should be on the hook for higher bills, in a proceeding interview with Bloomberg.
She said: “I think that might unlock the ability for us to put up water bills for those people who can pay while not putting up quite so much for people who can’t.”
The water industry has been pushing for an up to 40 per cent hike in household bills for the next pricing window, which is overseen by regulator Ofwat, the Times first reported. Thames Water is proposing a rise of 20 per cent.
Industry body Water UK confirmed to City PM last month that £10bn pledge to tackle storm overflows would also have to come from customers.
Thames Water was summoned to Westminster amid growing concerns over the future of the business, following the abrupt exodus of its former chief executive Sarah Bentley and chair Ian Marchant.
Also featured on the panel were fellow interim co-CEO Alastair Cochrane and new chair Sir Adrian Montague.
The UK’s largest water supplier, which has 15m customers, has been scrambling to secure £1.5bn to meet its operational costs, with the company weighed down by a £14bn debt mountain.
It has said it requires £2.5bn from stakeholders for the next pricing window.
Ross confirmed to the committee that no discussions around nationalising the firm had taken place with the government.
Thames Water has previously cited £4.4bn in cash and credit facilities as proof of its liquidity levels.