Thames Water will invest £400 million to upgrade water treatment and supply infrastructure in London now that Ofwat has approved the spending.
The regulator added a conditional allowance to Thames’ final determination in the 2019 price review (PR19). It had told the company more work was required to bolster supplies and upgrade aging infrastructure in parts of the capital. Thames was required to resubmit parts of its plans to qualify for the conditional allowance to invest in resilience of water supply.
Ofwat has given the greenlight to the spending, conditional on Thames meeting key milestones in the delivery of the upgrades. The regulator said the allowance would be returned wholly or in part to billpayers if the delivery milestones are not met.
Significant work is planned at Hampton and Coppermills treatment works to grow capacity and futureproof the water plants.
Currently, the plant at Hampton in West London has the capacity to supply up to 700 megalitres of water each day, which is around 30% of the capital’s demand. Coppermills in East London has a maximum output of 680 megalitres daily.
Running to 2032, upgrade work will replace ageing infrastructure and build new treatment capabilities at the two sites.
Esther Sharples, chief operating officer at Thames, said: “London is a 24/7 city and it’s our job to provide customers with a secure supply of water around the clock. It’s critical that we build resilience and invest in major infrastructure, so that we can meet the challenges ahead.
“As the population of London increases and we experience hotter and drier summers, we continue to see the demand for water grow. Investing in the condition of our assets is core to our continued turnaround and our planned upgrades will mean improved water security for millions of Londoners.”
The conditional allowance in the final determination was in recognition of the need for additional investment to increase resilience in London.
Ofwat permitted Thames additional spending beyond the £10.7 billion in its business plan, subject to regulatory approval and a non-specified shareholder contribution.
In 2021, £600 million of spending was approved by Ofwat to upgrade mains and distribution pipes, with shareholders stumping up half the amount and the rest charged to consumer bills.
In September last year, Hampton treatment works was affected by a power supply outage that left customers with low or no pressure. The company worked to get water flowing again within an hour of the initial outage.