Water is emerging as the new battle front in the struggle over the cost of living
Britain's biggest water company appeals to the water regulator to be allowed to charge its customers an extra £29 on top of their bills.
Thames Water made profits of £150m last year, and gave shareholders £92m - so why is it wanting to charge customers an extra £30?
Thames Water has confirmed its plans to increase its prices by 11% over inflation over five years beginning in 2015.
It could take regulator Ofwat up to a year to confirm its price limits.
Fourteen million households in the south east of England are supplied by the company.
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%.
– Ofwat's chief regulation officer Sonia Brown
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.
Britain's water industry regulator Ofwat said that an average eight percent hike in water bills planned by Thames Water was not justified.
"We said we would challenge Thames Water's request," Ofwat's chief regulation officer, Sonia Brown, said. "We have looked at the details and do not believe the current evidence justifies an increase in bills."
Thames Water, which has 14 million customers in London and the southeast of England, submitted a request in August to increase prices above the limits agreed in 2009.
Ofwat said it would take a final decision on the increase next month after a short period of technical consultation, which allows for the submission of new evidence.
Thames Water director Richard Aylard has told ITV News that the water regulator Ofwat didn't plan ahead for their big infrastructure projects, such as the Thames Tideway Tunnel, despite knowing the funding would be necessary.
He told ITV News Business Editor Laura Kuenssberg the company would have taken responsibility for funding the project, if they had been allowed to make an allowance for the scheme.
The Lib Dems deputy leader Simon Hughes has called on the water regulator Ofwat to reject a request from Thames Water to raise their prices to pay for the Thames Tideway Tunnel.
– Simon Hughes MP, Lib Dems Deputy Leader
Thames Water customers should not be expected to pay a huge amount towards the tunnel, given that in the years immediately before making this request, it had assets of billions of pounds which they have paid in dividends to their shareholders.
A spokesperson for the Liberal Democrats confirmed that the party would present an alternative method of paying for the Thames Tideway Tunnel later this month.
Industry regulator Ofwat has said revisions to price limits of water bills would not apply to customers' bills before April 2014, after Thames Water proposed to add an one-off fee of £29 per households. Ofwat chief executive Regina Finn said:
We know that household incomes are becoming ever more stretched - nobody wants to see any unnecessary increase in bills.
We will challenge these proposals and question the company strongly on their reasons. Proposed increases will only be allowed if they are fully justified.