UK water bills to rise as regulator green lights $4.6 billion in extra spending

By Prerna Bedi

Aug 13 (Reuters) - Five British water companies will be allowed to raise customer bills after regulator Ofwat on Thursday provisionally approved up to £3.4 billion ($4.59 billion) of additional spending on infrastructure and environmental measures.

The package would help utilities to remove so-called forever chemicals and improve drinking water quality, Ofwat said in a statement, and would support housebuilding and data centre development.

Britain's water industry has come under intense scrutiny and faces an overhaul to fix environmental breaches, soaring debt levels, high dividend payouts and rising customer bills.

"I know that households across the country are watching every pound and I share their frustration that years of underinvestment and toothless regulation has led to this," Environment Secretary Angela Eagle said.

SOUTHERN WATER CUSTOMERS TO SEE THE BIGGEST RISE IN BILLS

Five of the 13 companies which have received the approvals have been allowed to increase customer bills between 2027 and 2030, including Thames Water, Severn Trent, Southern Water, and Wessex Water.

Southern Water, with over 4 million consumers across Britain, will see the largest bill increase. They will rise by £43 for 2027-28 and £37 for 2029-2030.

"The additional funding reflects unavoidable increased costs and is needed if we’re to meet strict obligations to protect the environment and secure the long-term water supplies the population needs," a spokesperson for Southern Water said.

Britain's largest utility Thames Water, which is struggling to avoid a collapse, will be allowed to raise bills by £3 for 2027-28 and by £5 for 2029-2030.   

"This funding will allow us to continue to develop vital water security projects, which will keep the taps flowing for millions of customers across London and the South East," a Thames Water spokesperson said in a statement. 

'EXPENDITURE CAN BE CLAWED BACK'

"We will track performance to ensure companies are delivering the expected improvements for customers and the environment," said Ofwat Executive Director for Delivery Helen Campbell. "If they don't, expenditure can be clawed back." 

Ofwat said £477 million of the additional funding will be used to address rising demand linked to housebuilding and data centre development.

United Utilities, which plans to invest in water infrastructure for data centres in east Manchester, received the highest approval of £995 million, compared with the £1.11 billion it had requested.

Ofwat will make its final decision in December. 

($1 = 0.7410 pounds)

(Reporting by Prerna Bedi in Bengaluru; Additional reporting by Muvija M, Anushka Chourasia and Nithyashree R B; Editing by Mrigank Dhaniwala, Sherry Jacob-Phillips and Jan Harvey)