London May Face an 11% Water Price Rise for Thames Sewer

Fourteen million London area customers face as much as an 11 percent rise in bills after Thames Water Utilities Ltd. said the privately owned company needs that much to pay for a giant sewer project and upgrades.

Average bills would climb to 398 pounds ($651) a year by 2020 from 358 pounds now, mostly for a “super-sewer” project that follows the course of the capital’s river for 20 miles, the U.K.’s largest water provider said today. The utility plans to invest 5.1 billion pounds for the five-year period starting 2015 to build the Thames Tideway Tunnel and modernize networks.

“Much of London’s water and sewerage infrastructure dates from Victorian times,” Thames Water Chief Executive Officer Martin Baggs said in a statement seeking higher rates. “This infrastructure needs upgrading which inevitably puts pressure on bills. We have been spending 1 billion pounds every year on this work but there is a lot more that needs to be done.”

The U.K. water regulator Ofwat is reviewing prices that companies can charge for the five years beginning in 2015. Utilities were required to submit their business plans today as Ofwat will make its decision on the rate requests in a year.

United Utilities Group Plc (UU/), the country’s largest publicly traded water company, proposed an average bill decrease of 1.7 percent. Severn Trent Plc (SVT), the second-biggest, said bills will rise about 1.2 percent below inflation over the five-year period with prices frozen in the first year. And Pennon Group Plc’s South West Water unit will freeze bills in 2014-2015, with average bills below inflation thereafter.

Rejected Request

Ofwat in October rejected Thames Water’s request to charge customers an extra 29 pounds in 2014-2015 to help it buy land for its super-sewer project. Thames Water now says it needs eight pounds a year above inflation from customers.

The project would involve building a 7.2-meter-wide (24-foot) concrete tunnel west to east along the river, intercepting overflow points and shunting excess sewage to treatment plants. At present at least 30 million tons of excrement and waste spill each year into the famed river.

Britain has been debating a limit on water bills as most the six largest energy suppliers boosted gas and power prices this fall at three to four times the inflation rate.

To contact the reporter on this story: {Louise Downing} in London at ldowning4@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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