There's evidence that Thames Water's attempts to add 490 million pounds to its customers' water bills has badly backfired. The industry regulator, Ofwat, has refused permission for the rise - and we've learned that the firm could now face a "clawback" of money it has already taken.
Our Consumer Editor Chris Choi explains.
Ofwat's decision to reject Thames Waters' bid to increase prices by 8% is final, but Thames Water could appeal to the Competition Commission.
The company said: "We will review the decision carefully before deciding on our next steps."
Water regulator Ofwat has rejected a bid by Thames Water for an additional price hike for 2014 to 2015 of 8%.
We said we would challenge Thames' application, in the interests of customers. We did just that and on the evidence provided we are not convinced that an extra bill increase is justified.
Water regulator Ofwat has turned down Thames Water's application for an additional price increase for 2014 to 2015.
Ofwat says it was for Thames Water to justify the proposed 8% increase was in customers’ interests.
Within the three month timescale for assessing the application, the water regulator found the evidence the company submitted did not justify its proposed £29 additional increase in customers' bills.
Ofwat’s decision means the maximum that Thames can add to customers’ bills for 2014-15 is still 1.4% above inflation, as set in the 2009 price review.
Thames Water say its not possible to generalise about whether a family would be better or worse off on a meter.
The company says that customers won't be moved on to a metered account until two years after the new system has been activated. During that time they will still be able to monitor their usage on a daily basis and get price comparison bills before switch-over.
Around 30% of Thames Water customers are on meters and the company wants that to be 100% by 2030, starting in Bexley.
Thames Water says it hopes the scheme will encourage its customers to be more water-efficient. It says the new technology allows customers to monitor what they use and research shows metered customers tend to use water more sparingly.
It says London has less rainfall than Istanbul, only half as much as Sydney, yet one of the highest individual levels of water consumption in the UK.
Thames Water were fined for the following offences:
- Euston Road - for breach of permit conditions: £1,600
- Millbank - for working without a permit and three failures to notify offences: £5,600
- Camberwell New Road - for breach of permit conditions and a failure to notify offence: £3,200
- Upper Clapton Road - for breach of permit conditions and a failure to notify offence: £3,200
Westminster Magistrate’s Court fined Thames Water £13,600 following a guilty plea to nine offences in four locations earlier this year.
The prosecution is the latest in a series of successful prosecutions by Transport for London in its bid to reduce unnecessary roadworks and improve traffic flow.
With the average Londoner using 167 litres of water each day managing London's water is a major challenge. The London Assembly's Environment Committee will discuss how this is achieved with Richard Aylard, External Affairs and Sustainability Director of Thames Water.
Also on the agenda will be longer-term water management plans, such as what steps are being taken to improve water efficiency in the capital's homes and businesses, and to manage rainwater drainage, including the Thames Tideway Tunnel.
Assembly Members will also question the company about its future plans, given that its proposal to increase bills for 2014/15 by about £29 on average has now been rejected by Ofwat.