Water firms submit price plans, with Thames asking for 11% rise

Thames says the price increase is needed to help meet the cost of replacing London's ageing sewers

The UK's biggest water company wants to increase bills for its 14 million customers by 11% between 2015 and 2020.

Thames says the increase is needed to help pay for a "super sewer" being built across London.

On Monday, water companies in England and Wales submitted price proposals for the period to the regulator, Ofwat, with all but Thames saying they would hold or cut prices in real terms.

The proposals exclude inflation, which companies could add on an annual basis.

Thames says its bills would fall in real terms in the period were it not for a £2.8bn investment in the Thames Tideway Tunnel sewer network.

"Much of London's water and sewerage infrastructure dates from Victorian times," said Thames Water chief executive Martin Baggs.

"It has served us well, and allowed Thames Water's customers - both in London and in the Thames Valley - to benefit from some of the lowest bills in the country for decades.

"However, this infrastructure urgently needs upgrading which inevitably puts upward pressure on bills," he said.

Last month, the water regulator blocked a plan by Thames to raise prices by an inflation-beating 8% for next year.

Several water companies have proposed keeping any increases in household bills under the rate of inflation during the five-year period, including Severn Trent, United Utilities, and Anglian.

"We hope our pledge to peg back bills for the next six years, and to protect them from higher inflation, will offer help and give reassurance to our customers," said Peter Simpson, Anglian chief executive.

Dwr Cymru Welsh Water has also promised below-inflation price increases. Glas Cymru chairman Bob Ayling said: "By 2020 we will have seen 10 consecutive years of keeping our price increases below inflation - reducing our prices by 12.5% in real terms."

The regulator will make a final decision on the proposals from each water company by the end of 2014.

Cathryn Ross, Ofwat's chief executive, said: "Ofwat's job is to make sure that customers get a fair deal from water companies. We will now carry out an independent, rigorous process to analyse and challenge companies' plans to ensure that happens."