Thames Water customers have expressed shock at higher than expected annual increases to April’s bills as the struggling water group “front-loads” the impact of permitted regulatory increases.
The utility, which supplies about a quarter of the UK population, was allowed by water regulator Ofwat to raise bills by 35 per cent by 2030. However, some customers have been flummoxed to receive bills that are 47 per cent higher than a year ago, as demands for payment landed on doormats and in email inboxes this week.
Thames Water says the discrepancy arises because Ofwat’s stated increases apply to the total sum billed over the five-year period, and have been front-loaded this year to fund vital infrastructure improvements. Percentage increases should be flatter in the years to 2030, though water companies are permitted to adjust Ofwat’s figures in line with inflation.
“It’s beyond scandalous for Thames Water to implement such huge financial increases,” said Ruth Hawkins, who was not prepared for the annual bill for her two-bed flat in Hackney to increase by 47 per cent from £432 to £639 this year.
Difficulties fitting water meters in blocks of flats means Thames Water estimates her water consumption using the “assessed household charge”. This year, it has increased estimates of the volumes of water used by unmetered customers on this tariff. In addition, fixed annual standing charges for all water customers have increased to £191.71, making up a bigger proportion of bills for customers in smaller properties.
Customers with water meters have also been surprised by the size of increases, although they have the option of cutting their consumption to reduce bills. Michael Martin, a financial adviser, said the annual bill for his home in Wimbledon had increased by 45 per cent this year to £1,186.
“Since 2018, the total increase in my water bill is not far off the performance of the S&P 500 index,” he said.
Rival bidders are currently circling the UK’s largest water utility as it struggles with a debt mountain of nearly £20bn and attempts to head off the threat of temporary renationalisation.
Ofwat’s permitted 35 per cent increase to bills was much lower than the 53 per cent increase Thames Water had asked for. This month, it lodged an appeal with the UK competition regulator, meaning customer bills could yet surge even higher, though a decision is not expected until later this year.
“For us to continue to deliver billions of litres of clean water and take wastewater away from millions of homes, it’s vital that we invest in our network and infrastructure over the next five years,” Thames Water said.
“We’re already helping around 450,000 customers pay their bills, and by 2030, one in 10 households could be in receipt of support.”
Thames offers a 50 per cent discount on bills for customers on low incomes who can prove their bill is more than 5 per cent of their net annual income.
It also offers a single occupier tariff for customers without water meters who can prove they live alone, which could reduce annual bills by about 10-20 per cent depending on the number of bedrooms. However, this discount is not extended to single parents.
“We would encourage any customer that is concerned about their ability to pay to reach out to us so we can assess the right package of support for their circumstances,” Thames Water added.
Almost half of households in England and Wales struggled to pay for their water over the past 12 months, while more than 8 per cent of households — or 2.5mn people — were in payment arrears, according to research published by Ofwat in January.
Ofwat said: “It is essential that all companies clearly communicate changes to bills so that customers fully understand how much they are expected to pay, and why this is the case.”