Water giant forced to ditch 17 per cent price hike
PUBLISHED: 11:54 28 January 2010 | UPDATED: 17:33 25 August 2010
BOSSES of the biggest water company in the country have climbed down from challenging the industry watchdog s ruling on price hikes. Thames Water originally called for a 17 per cent rise in prices, before inflation, between 2010 and 2015. But last Novem
BOSSES of the biggest water company in the country have climbed down from challenging the industry watchdog's ruling on price hikes.
Thames Water originally called for a 17 per cent rise in prices, before inflation, between 2010 and 2015. But last November Ofwat limited it to a mere three per cent rise.
The company, which supplies water to 8.5million customers across London and the Thames Valley, accepted the decision just before the deadline to refer the settlement to the Competition Commission.
Last summer it threatened to try blocking the regulator's draft ruling to freeze bills for five years.
Bosses claimed they would not be able to meet targets to reduce leakage, and lobbying persuaded the watchdog to settle for a three per cent hike.
Interim chief executive Martin Baggs said: "Ofwat has set us a particularly tough challenge but there have been some welcome changes from the draft determination and we will now get on and deliver the agreed plan."
The majority of the 21 water companies in England and Wales have accepted Ofwat's ruling. Bristol Water, which was limited to a seven per cent rise when it asked for a much bigger hike, has appealed to the Commission.
Thames Water plans to spend almost £5billion on the network over the next five years.
Plans include the construction of a tunnel and the design of another to reduce overflows from London's sewerage system, cutting pollution in the Thames and the River Lee.
It also plans to improve treatment standards and capacity at all five major London sewage works, install water meters at 370,000 properties and replacing worn-out Victorian water pipes under the capital.
The company's pre-tax profits jumped 15 per cent to £225.5million for the six months to September 30 despite headwinds from bad debts and energy bills.