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Thames Water has accepted a lower rate of return for investors – but customers would still see bills rise under its revised proposals for 2015-20, to pay for the Thames Tideway Tunnel.
Thames customers would see bills rise by £37 by 2019-20, an approximate two per cent per year rise in real terms, under the revised business plan submitted today. Without the costs of the controversial super sewer, bills would fall by 0.4%.
The UK’s largest water company has accepted Ofwat’s proposed 3.7 per cent wholesale WACC as part of its overall package of risk and reward, but has warned it would not be able to make this work financially on a standalone basis. The company has proposed holding back £108m of wholesale cost savings.
The company’s business plan said: “Our overall view is that on a standalone basis 3.7 per cent WACC is too low and, over time, could be expected to have an adverse effect on the attractiveness of the industry for investors and put long-term investment at risk.”
Ofwat will issue its draft determination on the company’s business plan on August 29th.
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