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Regulator Ofwat has said that utility company Thames Water has so far failed to justify half of its initial spending plans for the London super sewer project. As a result of this, Ofwat is demanding that the company provide more information to explain proposals for a further £331 million.
Thames Water is seeking approval to spend £655m over the course of the next five years as part of the £4.2 billion project which intends to upgrade the capital’s sewers in order to prevent sewage discharge from entering the Thames. Ofwat has said that so far it is only satisfied with £324 million of the spending. It is mid way through a process of negotiation on utilities’ spending plans for 2015-2020, which will determine customers bills for this period.
Alongside Thames Water, it has written to United Utilities and Bristol Water telling them that it has yet to be convinced it should allow them to spend as much money as they are proposing to spend over the upcoming price control period. The regulator said that there were significant differences between the companies’ spending plans and the assessment of wholesale costs. Ofwat is therefore advising the companies’ to revise their plans or submit more information to help justify them ahead of the final deadline which has been set for October 3rd.
As it stands, Thames Water is the only company proposing ‘real term’ bill increases over the 2015-2020 period. It wants to increase residential bills by £8 each year to help pay for the super sewer.