Thames Water to invest record £12bn on infrastructure upgrades
Company to spend on improvements and reducing pollution incidents
Britain’s largest water company plans to invest a record amount on improving infrastructure and will cap payouts to investors after a barrage of criticism over its performance.
Thames Water, which supplies more than 15m people, said it will spend £11.7bn on upgrades for the period from 2020 to 2025.
The business plan, submitted to the industry regulator on Monday, will cut leaks by 15 per cent, reduce pollution incidents by almost one-fifth and generate enough green energy power to 115,000 homes, Thames Water said.
It also includes £2.1bn to “boost resilience and reduce leakage”, the company said. Thames Water was ordered to pay £120m in June by Ofwat, the regulator, to compensate customers over leakage failures.
The company will also limit annual external shareholder distributions to about £20m. Average bills will remain flat before inflation, it said.
Steve Robertson, chief executive of Thames Water, said the company’s proposals were “ambitious, well-costed and widely supported by our customers, who agree we should prioritise the most vulnerable”.
“Bills will be flat in real terms over the five-year period and our shareholders will receive annual distributions of around £20m as we prioritise investment on significantly improving service,” he added.
After 2020, management bonuses and dividends will be tied to meeting targets on reducing leakage and pollution, and increased customer satisfaction, Thames Water said. The company is also overhauling its corporate structure to make it easier to understand and plans to lower operational unit costs by nearly 14 per cent.
All water companies across England and Wales were due to submit their business plans to Ofwat for the years 2020 to 2025 on Monday. Severn Trent and United Utilities said they would cut the average bill by 5 per cent and 10.5 per cent respectively. South West Water said it would offer customers a stake in the business.
Ofwat will publish an assessment of each company's plan in January 2019. The regulator said in December that the results of its price review would result in a cut in bills between £15 and £25 a year from 2020 to 2025.