Who should pay, and what are they paying for?

The Utility Week news team set the national agenda this summer with two scoops raising the eternal question: who should pay for what? First up was our prediction that Thames Water would ask for a mid-term price rise. Several days later, the country's largest water company braved media and consumer outrage with a request that equates to a £29 one-off charge per customer. Sir Humphrey Appleby might have termed Thames' bid a "brave decision", given that the regulator has already made its feelings about profits and price rises clear, and the company's reputation has recently taken a battering for its dividend payments and tax bill (or lack thereof). Ofwat has until November to make a ruling, meaning the decision will fall to incoming chief executive Cathryn Ross - who is unlikely to want to begin her tenure by approving a hugely unpopular price hike. While most of the extra costs Thames has highlighted in its bid relate to land acquisition for the Thames Tideway Tunnel, a significant chunk arises from bad debt and the adoption of private sewers. These same challenges face other water companies, none of whom are yet asking for extra cash. Moreover, Thames is asking Ofwat to tear up the rules by allowing it to roll forward the recovery of AMP5 costs into AMP6 to spread the burden on customers. Thames seems wilfully deaf to the messages coming out of Ofwat, but must surely be aware that its chances of getting the full sum approved are slim to negligible.

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