Page last updated at 15:07 GMT, Monday, 11 August 2008 16:07 UK

Water firm plans 6.5bn overhaul

Workman renewing Victorian water mains in Piccadilly
Thames Water has a 6.5bn investment plan
Improvement of "ageing" water and sewage systems is the main reason given by Thames Water for a proposed increase in bills 3% above the rate of inflation.

Water companies in England and Wales have submitted their pricing plans for 2010 to 2015 to regulator Ofwat, with Thames Water proposing one of the highest proportional rises.

The UK's biggest water company said its 6.5bn investment plan would be the largest spending programme ever carried out by a UK water company, and "guarantee supplies for the future".

Thames Water also claims its customers have "enjoyed the lowest bills in the industry for many years", and while there will be "an inevitable impact on bills" it will try to keep charges below the industry average.

The Consumer Council for Water said the rise 3% above inflation was "reasonable" as long as it was "sustainable".

'Big schemes'

David Owens, Thames Water's chief executive officer, said the money was essential to improve London's ageing water and sewerage infrastructure, some of which is over 100 years old.

"It will help guarantee their supplies for the future, and ensure that we are able to cope with future challenges - not only population growth and climate change, but tighter environmental and legislative requirements," he said.

The company - which currently has 13 million customers across London and the south-east of England - estimates that more than 380,000 people will come into the region in the next five years.

We don't want it to be a 'reasonable blip' which results in spending going overboard and it rising to about 40% after five years
Duncan McCombie
Consumer Council for Water

The biggest slice of its 6.5bn projection - 2bn - has been allocated to maintenance, "to ensure high service levels for both water and wastewater".

But it also plans to invest 485m on sewer flooding alleviation and 1.3bn on the Thames Tideway and Beckton Sewage Treatment Works.

A spokeswoman said the Lee Tunnel phase of the Thames Tideway tunnel would stop half of all sewage discharges currently entering the Thames, and a second Thames tunnel, which is "more complicated", would fix 32 overflow points.

And it is hoping to spend 230m on a proposed reservoir in Oxfordshire to "secure supply for the future".

Project progression

Duncan McCombie, strategic business manager for The Consumer Council for Water, said these were "very big schemes" which would "bring benefit to the consumer".

But he expressed concern about whether they would be delivered on time.

"A 3% rise is reasonable, but only if the projects and their costs progress at the right pace," he said. "We don't want it to be a 'reasonable blip', which results in spending going overboard and it rising to about 40% after five years."

An artist's impression of the proposed reservoir near Abingdon
The water firm is hoping to spend 230m on a reservoir near Abingdon
He said it was important to consider the "can't pay" consumer because "water poverty problems" might arise: "Thames Water are talking about 3% a year, which is actually over 15% over five years, plus inflation."

But Thames Water said customers would still be paying less than 1 a day for all their water and wastewater needs.

According to Mr McCombie, although London and the South East has got Victorian pipelines and a greater influx of people than the rest of England and Wales, old cities like Manchester, Birmingham and Liverpool suffer from a similar ageing infrastructure.

But he thinks London has the biggest leakage problem.

Thames Water - which has been criticised by Ofwat in the past for its poor leakage record - has factored in 1bn for fixing leaks.

It said 900 miles of cast iron pipes had been replaced with plastic, and it currently spends 500,000 a day fixing leaks.

The company also hopes to spend 243m installing one million water meters, raising the total number of metered households to 54%, compared with 25% today.

And it said it aimed to reduce its carbon emissions by 20% over five years.

Mr McCombie said every water company should be thinking about these issues.

"Climate change, the removal of waste and making sure there is enough water for the future affects everywhere in the UK," he said.

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