Watchdog blocks Thames Water bid for a price rise

Thames Water, Britain’s biggest water firm, will not be allowed to hit its 14 million customers with an 8% price hike next year.

Thames, which is owned by Australia’s Macquarie and a group of investment funds, had wanted to increase customers’ bills, already standing at an average £354 a year, by £29 in 2014, claiming that it had underestimated the costs of projects such as London’s new multi-billion super-sewer.

But Ofwat, the water regulator, has turned down its request for a price hike.

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.”

Thames Water first applied to Ofwat in August to allow the price hike, but the regulator ordered the utility to prove why the extra money was needed.

It failed to do so, with Ofwat also warning that Thames had under-invested on sewer flooding projects and on sewer treatment, and failed to adequately maintain some of its waste water network.

The move means the maximum Thames can add to customers’ bills next year is inflation plus 1.4%.

The company can, however, lodge an appeal to the Competition Commission.