Huge rise in water bills

Thames Water customers are facing a huge leap in their bills next year to pay for the replacement of worn-out pipes and sewers.

The figure is less than Thames had asked for but more than Ofwat originally said it would accept. It means average bills will rise from £210 to £246 from next April.

The money will allow Thames to raise about £3billion to modernise its ageing infrastructure. However, it will not be enough to pay for the so-called "super sewer" tunnel under the Thames that campaigners have demanded to stop sewage flooding into the river. A decision on whether that should go ahead and how it should be financed has yet to be made.

Today's decision will see bills rise by £51, or 24 per cent, over the next five years, an annual average increase of four per cent. The steepest rise comes in the first year so Germanowned Thames can start the modernisation programme.

Consumer groups said next year's rise would be hard for people on low incomes. Deryck Hall, senior analyst at water watchdog WaterVoice said: "This is a fairly substantial hike. It is going to be tough for the less well-off, especially with energy costs rising and higher council taxes in the offing. There is going to be an awful lot of pressure on customers."

Thames Water today left open the possibility it might challenge the Ofwat decision.

Thames Water Utilities chief John Sexton said: "We do still have the option of making an appeal to the Competition Commission. This is not a decision we would take lightly, but it is a step we are prepared to take, if we conclude Ofwat has not made adequate provision for the work needed over the next five years."

Ofwat's water services chief Philip Fletcher said: "We know these increases will be unwelcome, especially to people on low incomes. We have challenged the companies' costs to ensure customers continue to receive value for money."

Ofwat had given top priority to preventing sewage flooding in homes, he said. He added: "The new price limits will now enable companies to resolve or alleviate, by 2010, all the known high-risk problems identified in their business plans where overloaded sewers cause flooding inside properties."