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Thames Water has been given the green light for infrastructure improvements to boost resilience, with its shareholders set to fund half of the £600 million investment and rest being charged to consumers’ bills.
Ofwat offered provisional backing to the spending to upgrade of hundreds of kilometres of water mains and distribution pipes beginning in 2022.
There will also be investment in work to stop spikes in pressure within the pipes that can increase the risk of bursts as part of the company’s resilience work.
Ofwat’s PR19 final determination recognised the need for additional investment to increase resilience in London during 2025-25. It permitted Thames additional spending beyond the £10.7 billion in its business plan, subject to regulatory approval and a non-specified shareholder contribution.
Sarah Bentley, Thames chief executive, said: “We’re delighted to be unlocking this significant extra investment direct from our owners, which are mainly pension funds who all take a long-term view of the company’s infrastructure, customers, and the natural environment. They recognise the need for additional investment in London and have approved significant expenditure in the company’s five- year business plan, over and above that allowed under the regulatory price control.”
“Leakages and bursts have a real impact on communities and improvements for customers are long overdue. Almost two years ago we told Thames Water we would support additional investment to improve services if they submitted robust plans and their shareholders co-funded the investment package,” said Ofwat interim chief executive David Black. “We are pleased to be making progress towards this extra investment and will continue to make sure that customers’ interests are protected and promoted.”
The investment has been approved by the regulator through a gated governance structure.
Having passed through the first gate, plans are now being drawn up ahead of gate two later this year, which will map out which parts of London’s vast pipe network will benefit from the funding based on risk and previous issues with bursts or repeated leaks. The scheme will be subject to a further three stages of scrutiny by Ofwat that include consumer protection to ensure efficiency throughout the project while delivering on the commitments.
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