Thames wants to add £3bn to PR24 spending plans

Thames Water has proposed adding up to £3 billion more to its spending plans for PR24, bringing its total expenditure to £21.7 billion for the five years to 2030.

This would raise household bills by a further £19 to £627 by 2030, if the full £3 billion of proposed spending goes ahead.

It also takes the industry’s total spending ask for PR24 to just over £100 billion, with all other companies already announcing updates to their business plans. (See table below for full breakdown.)

In its original PR24 business plan, submitted in October 2023, Thames outlined £18.7 billion worth of spending.

The company has now officially added a further £1.1 billion to its plans, following initial feedback from Ofwat. This brings Thames’ total spending ask to £19.8 billion.

However, the water company has also outlined its intention to spend an additional £1.9 billion on top of this, which would bring Thames’ PR24 totex to £21.7 billion.

Thames said the additional £1.9 billion was dependent on the availability of labour in its supply chain, which it would agree on an annual basis with Ofwat.

The company has called this a “Deliverability Assessment Mechanism”, which is reliant on the supply chain capacity being available and subject to review during the asset management period (AMP8).

If the additional spending is approved then customer bills will increase by an extra £19 by 2030 compared to what was outlined in the original business plan, which is a 44% increase compared to current bills.

If the additional £1.9 billion is not approved then bills will increase to £608, which is the same as the hikes previously stated in its original PR24 submission.

Water regulator Ofwat requested updated bill increases and totex for the five years from all companies to reflect extra information and added requirements since plans were submitted in October 2023.

The bulk of the extra spending is on environmental enhancement schemes, particularly on tackling storm overflows and removing phosphorous from wastewater.

Thames said its additional spending has been proposed to reflect the level of environmental investment required across the region.

The company’s shareholders previously said the original plan was not financeable and withdrew extra funding support previously promised unless the regulator agreed to more favourable terms going forward.

Chris Weston, chief executive of Thames, said: “Our business plan focuses on our customers’ priorities. As part of the usual ongoing discussions relating to PR24, we’ve now updated it to deliver more projects that will benefit the environment. We will continue to discuss this with our regulators and stakeholders.”

Consumer body CCW has called out the company for not focusing on bill affordability in its update. “On the surface the proposal for more investment from Thames Water is a positive step for its customers that have endured some of the worst customer service in the sector,” its chief executive Mike Keil said.

“We should not lose sight of the fact that only 16% of its customers thought the company’s proposed bill rises in its five-year plan were affordable. This announcement appears to offer nothing to ease the fears of those already struggling to pay.”

Ofwat’s director of the price control told Utility Week that plans would be subject to more changes between the draft determinations in June and the final determinations in December. This, Chris Walters said, was due to ongoing discussions between the industry and environmental regulators and policy makers.

PR24 totex comparison – Original submissions vs updated costs