LONDON (Reuters) -British utility Thames Water lodged an appeal to the country’s competition regulator on Friday, beginning a process to try to raise the prices it can charge customers for the next five years and improve its chances of survival.
Thames Water is waiting to hear whether the courts will approve a 3 billion pound ($3.77 billion) rescue deal to ward off nationalisation in the short term and give it time to deal with its financial problems, including debt of 18 billion pounds.
Its future viability also depends on how much it can charge customers. Water regulator Ofwat has said Thames Water can increase bills by 35% over 2025-2030, less than the 53% rise the company says it needs.
Thames Water said on Friday the Ofwat ruling “does not appropriately support the investment and improvement that is required for Thames Water to deliver for its customers, communities and the environment for the next five years”.
The company said it was seeking a settlement that contained “challenging but achievable” targets and “an appropriate balance of risk and return”.
The appeal process is set to take months.
Thames Water also needs to raise 3 billion pounds in new equity. To attract that investment, it has to charge prices high enough to deliver returns for potential new shareholders.
Britain’s water sector has faced a public backlash over sewage pollution in rivers and accusations that for decades profit has been prioritised over the environment and maintaining infrastructure.
Ofwat’s final determination provided to Thames Water in December included directives over pricing, investment and targets. Thames Water had wanted total expenditure of 22 billion pounds over the five years, which would also depend on higher pricing.
Ofwat, which is focused on getting value for money for Thames Water’s 16 million customers, as well as protecting the environment, set the limit at 17 billion pounds.
($1 = 0.7956 pounds)
(Reporting by Sarah Young and Pushkala Aripaka in Bengaluru, additional reporting by William James; Editing by Catarina Demony and Barbara Lewis)
