The water company made an appeal in October against the regulator’s draft decision to reject Thames’ request for an interim increase of £29, or an 8 per cent additional increase in customers’ bills.
However, Ofwat reiterated last month that the evidence the company submitted did not justify its proposed hikes.
Thames still had the option to appeal to the Competition Commission but has said today it would accept the regulator’s final decision.
Despite this, Thames is still looking to increase bills from 2015.
In its business plan submitted to Ofwat at the beginning of the month, the water company applied for an increase in bills £8 above inflation for each of the five years from 2015 in order to fund the £2.8 billion Thames Tideway Tunnel.
It was the only water and sewerage company to propose a rise above inflation.
A Thames Water spokesperson said: “We believe we had a strong case but have accepted the decision is in the best interests of our customers. We are now focusing on the future, including our recently submitted business plan, covering the period 2015-2020.”
Ofwat is also considering whether to deduct additional gains from Thames due to “formula effects which could have resulted in significant net financial benefit … not arisen as a result of management action”.
If the regulator goes ahead with its plans to “claw back gains”, Thames Water will again have the option to appeal to the Competition Commission.