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UK water regulator Ofwat will allow utilities in England and Wales to raise customer bills by an average of 36 per cent by 2030, a bigger increase than it had previously indicated, but still less than the increases requested by struggling companies such as Thames Water.
Ofwat announced that the draft law adds to its “final decision” on the complex set of measures and standards governing Britain’s privatized water companies for the next five years.
David Black, chief executive of Ofwat, said: “Water companies now need to rise to this challenge, and customers will rightly expect them to show they can deliver significant improvement over time to justify increases in bills.”
The regulator also fined Thames Water £18m after finding the company's dividend payments last year breached its license conditions.
The bill increases are higher than the average increase of 21 per cent that Ofwat indicated it would allow earlier this year.
The regulator is only allowing Thames Water to raise bills by 35 per cent, far less than the 53 per cent increase required by the near-bankrupt company.
Water companies are in negotiations with Ofwat about the extent to which they can raise bills between 2025 and 2030. The industry has pushed for big increases, saying they are needed to finance investment in faltering infrastructure.
Since the industry was privatized in 1989, water companies have been required to reach settlements with the regulator every five years covering increases in bills, the amount they can invest, and the returns their investors can earn.
The long crisis at Thames Water has threatened to drive investors away from the industry, raising the risks for Ofwat. Thames Water, the UK's largest water company, has warned that an adverse ruling would jeopardize its efforts to raise new shares from investors.
This is a developing story
