Thames Water boss on £2.3m salary refuses to rule out 40% bill increases | Personal Finance | Finance

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Thames Water’s chief executive has not ruled out bill increases of up to 40 percent for customers as the company works to secure its future.

Chris Weston told Sky News’ Ian King that he didn’t believe the firm had been “at all secretive” about the potential for price rises.

He said: “The plans that we have put forward – which are very much in accordance with what customers are asking us to do – require an investment of around £20billion in that 2025-2030 period, and that would result in a bill (increase) of around 40 percent.”

He added: “It is very clear listening to our customers that what they value most is high-quality clean drinking water and that we do all that we can to protect the environment. Those two things are primarily what is driving the investment that we are having to make in our network in that five-year period.”

However, Mr Weston acknowledged that any bill increases could be “difficult.” He added that the company was exploring ways to assist the most vulnerable customers.

This comes following news that investors of the group – the UK’s biggest water supplier with 16 million households across London and the South East – had pulled a £500million funding lifeline that was due to be paid at the end of this month.

Thames Water blamed Ofwat, claiming that the regulator had made its business plan “uninvestable”.

It is understood that investors pulled the funding plan agreed last summer after Ofwat refused to bow to the water giant’s demands for a 40 percent bill hike for customers, an easing of capital spending requirements, as well as leniency on penalties for failing to meet targets.

Mr Weston admitted that if no alternative funding could be found by the end of next year, it could face the prospect of a special administration – which would likely see the taxpayer pick up the bill.

Thames Water stressed that it had £2.4billion of cash currently available to it, which should see it meet funding needs for the next 15 months.

Mr Weston said there was a risk of nationalisation if funding was not secured after this, but added: “We are a long way from that point at the moment”.

Both Ofwat and Thames Water sought to reassure customers that services would not be affected by the funding woes. Chancellor Jeremy Hunt said the Treasury would monitor Thames Water’s situation “very carefully” after the funding revelations.

Asked by broadcasters if the Government was ready to step in to support Thames Water customers if necessary, the Chancellor added: “Our understanding is that the company is still solvent and today’s news should not have an impact on the services received by customers.

“Obviously, there are parts of the country where the service has not been up to scratch … overall we will continue to watch the situation very carefully.”

Former British Gas executive Mr Weston was appointed to head up Thames Water in January with a reported pay package of up to £2.3million a year. The appointment coincided with reports about the scale of the debt burden amassed by Thames Water’s finances over years of private ownership.

are set to increase for households in England and Wales by six percent on April 1 to help fund infrastructure improvements.

Despite the firm’s poor performance, Thames Water customers are due to see their average charge rise by £15.

Thames Water has been battling to secure its financial future since last summer, with a funding crisis leaving the firm on the brink of emergency nationalisation.

Last July, it agreed to a rescue funding plan with shareholders – including the Universities Superannuation Scheme (USS), China’s sovereign wealth fund, a Canadian pension fund and the BT Pension Scheme – that would see them invest £750million, with the first £500million due by the end of this month.

But Thames Water said the funding plan was subject to conditions, including a business plan supported by “appropriate regulatory arrangements”.

In a joint statement, Thames Water’s nine investors claimed that Ofwat had “not been prepared to provide the necessary regulatory support” for their funding and turnaround plan.

Thames Water said it was in ongoing talks with Ofwat to secure regulations that were “affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors”.

It said once the new regulatory plan was agreed with Ofwat, it “intends to pursue all options to secure the required equity investment from new or existing shareholders”.

Mr Weston said: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water.”

He said the group “will continue to provide our services to our 16 million customers”.

Ofwat said Thames Water must now seek further funding for its turnaround plan, but sought to assure that “safeguards” were in place to protect services to households.

Thames Water is ring-fenced from its holding company Kemble, which has a £190million loan due for refinancing next month – a debt that the group has already warned it will not be able to repay.

Thames Water has been left with debts of nearly £15billion, while it has also come under intense scrutiny after missing sewage spill and leakage targets.

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