Thames Water Submits Ambitious £11.7bn Business Plan

Thames Water, the water and wastewater company, is arranging to spend £11.7bn on improving infrastructure, service and efficiency over the 2020-25 period.

All water companies across England and Wales are now proposing their business plans to Ofwat for the years 2020 to 2025. Thames Water’s plan includes a record investment of £11.7bn, including £2.1bn to increase network resilience and reduce leakage.

At the moment, 25% of all the water that it treats and puts into its system is lost, and in June 2018 Thames Water was fined £120m by Ofwat for failing to control its leaks.

Thames Water said that its new business plan would cut leaks by 15% and pollution incidents by 18%. The long-term goal is to halve leakage and have zero pollution.

After 2020, management bonuses and dividends will correspond with meeting targets for reducing leakage and pollutions, and increased customer happiness. Thames is also revamping its corporate structure to make it easier to understand and plans to lower operational unit costs by nearly 14%.

The five-year business plan also allows for dividends of around £20m a year for shareholders.

Thames Water chief executive Steve Robertson said: “More than 15 million people in the UK depend on Thames Water every day to go about their lives. Our responsibilities to the environment and customers are huge, and we will partner with them and our peers to insulate our region from the effects of changing climate patterns. This includes planning for a strategic reservoir for the SE region of England and exploring the potential of water transfers.

“Our proposals are ambitious, well-costed and widely-supported by our customers, who agree we should prioritise the most vulnerable. Bills will be flat in real terms over the five-year period and our shareholders will receive annual distributions of around £20m as we prioritise investment on significantly improving service.”

As part of Ofwat’s 2019 price review, all water companies must set out a detailed business plan summarising how they will meet the needs of their customers from 2020 to 2025 and beyond.

Plans cover investment plans, what they intend to charge customers, how they will support vulnerable customers and how they will ensure the long-term resilience of their infrastructure and operations.

Ofwat will examine all of the business plans before publishing an initial assessment of each company’s plan on 31 January 2019, where it will categorise companies’ plans according to the level of quality, ambition and innovation they have demonstrated.

Ofwat senior director for strategy & planning John Russell said: “We’ve reached a key milestone in our price review process. From now until January 2019, we’ll pore over each and every business plan and we’ll be looking for evidence that they are robust, ambitious and, crucially, that they have been shaped by customers.

“All companies have had an opportunity to develop high-quality plans, but where plans aren’t sufficiently ambitious or stretching, we’ll step in to protect customers and the environment.”

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