Some of you may have received a letter from Thames Water in the past few days regarding their price changes for next year, and justifications. Click below to view or download a copy. The letter states that the average increase for the forthcoming year will be £19.00 per month. The average annual charge for Thames Water customers this year – according to regulator OFWAT- is £436. Such an increase (£228.00 annualised) represents an increase (excluding annual inflation, running at an estimated 2-2.5% at present) greater than 52%……..
Click here to view a redacted copy of the Thames Water letter.
Is this accurate? And how does this fit with what OFWAT have agreed? OFWAT issued a release in December last year explaining that they had approved an increase in charges to fund the required infrastructural repairs and ‘upgrade’ but estimated that the increase for an average bill would be 20% for the coming year, rising to an overall combined 36% increase across the next five years. A ‘front loaded’ increase, large amount this next year but smaller amounts in the following four years. A bit different to Thames Water’s letter stating an increase equating to two and a half times OFWAT’s agreed increase just for next year, and one and a half time the entire expected increase across the full five year period. So what is going on?
We should all find out exactly what we will be forced to pay for 2025-26 very soon, we should receive details by early February.
We contacted Thames Water regarding this and received the following reply:
- Ofwat’s figure is an average across all suppliers. There is great disparity in bill increases across suppliers – using Ofwat’s figures they range from a 21% increase at Wessex Water to a 53% increase at Southern Water.
- Ofwat’s figure did not include inflation. The bill increase number that we will be providing to customers on our website on 31 Jan and on bills shortly after, includes inflation and also the impact of the cross-subsidy that customers pay to fund the social tariff that helps those less able to pay. It will therefore be a number that better reflects the price increase that customers will actually see on their bills.
- As per your letter, Between February and March, you’ll receive your new bill for the year ahead. On 31 January 2025, we’ll update our charges on our website.
The reply doesn’t address the stated size of the increase, just says wait until you get your bills for next year. The figures that are quoted in ‘point 1’ are what OFWAT have approved / agreed for the period of 2025 – 2030 – Five years, not just one. Thames Water are keen to point out that the OFWAT figures do not include inflation and were based on the historical 2022-23 level. The ONS published level of inflation for December ’24 over the previous December was 2.5%.
Below is the table published by OFWAT in December covering the next five year period. It shows that Thames Water wanted an increase over these five years of £231 – 53% – but OFWAT pegged this back to £152 – 35%. Click on the panel to enlarge.