UK consumers face bigger water bills with the industry forecast to bolster investment by up to 75% as companies seek to repair aging, leaky pipes.
(Bloomberg) — UK consumers face bigger water bills with the industry forecast to bolster investment by up to 75% as companies seek to repair aging, leaky pipes.
Investment in the 2025-30 period is likely to be about £89 billion ($109 billion), compared with £51 billion in the prior five years, according to Chris Walters, senior director for industry regulator Ofwat’s price review process.
Walters’ comments, made at an industry meeting last week, were confirmed by Ofwat. He didn’t provide estimates for the increases consumers may face.
The industry has been on the end of growing anger from the public and politicians after decades of underinvestment in water infrastructure resulted in leaking pipes and sewage spills into rivers and seas. But upping customers’ bills — which company executives have said is inevitable — will be a hard-sell during the country’s ongoing cost-of-living crisis.
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Water bills already have risen 350% since water companies were privatized more than 30 years ago and consumers are reluctant to pay more. A survey conducted by Deltapoll for Bloomberg in July showed that almost two-thirds of respondents said they would not be willing to pay higher water bills to fix sewage outflows into waterways and seas, instead expecting companies to fund this themselves.
But David Henderson, chief executive officer of industry association Water UK, told lawmakers in June that the “the large bulk” of additional investment needed will have to be sourced from customers.
Water companies have to balance investment needs with government pressure to keep bills low, while also appeasing the investors who help finance their operations. Major players such as Thames Water Ltd. and Southern Water Ltd., plagued by high debt-financing costs, have been forced to turn to shareholders to provide additional equity. In July, investors in Thames Water agreed to put in an extra £750 million of equity funding to help stave off a temporary takeover by the government with more money needed down the line.
It’s an “unpopular fact,” but there is only one source of funding and that is ultimately the customer, Cathryn Ross, co-chief executive officer at Thames Water, said in July. Thames is the UK’s largest water utility, with 15 million customers in and around London.
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