Thames Water has demanded the right to increase customers’ bills by up to 40 per cent as its debts continue to rise.
It comes amid warnings the company may run out of money by April if its financial position does not improve.
In interim results released on Tuesday, the utility company announced profits had halved to £246m in the first half of the year, with debts rising 7% to £14.7bn.
Company executives said bill rises are needed to protect the company‘s future, amid mounting pressure on the utility firm to fund sewage improvements.
The utility company has projected price rises of around 40% to water bills may be necessary, according to figures presented in its business plans.
Interim co-chief executives Cathryn Ross and Alastair Cochran said: “Turning around Thames will take time. We simply cannot do everything that our customers and stakeholders wish to see at a pace and for a price that everyone would like.
“We will continue to make the tough choices required to deliver what matters most to our customers and the environment.”
Thames Water’s board took the unusual step of warning regulator Ofwat not to block any attempt to increase bills.
Its comments published on Tuesday said: “On 2 October 2023, [Thames Water] submitted its business plan to Ofwat…There is no assurance at this point in time as to what funding will be allowed.”
The statement goes on to say that Thames Water is entitled to secure “reasonable returns on its capital” that allows it to “offer investors an opportunity to earn the returns required to finance it”.
It adds that “Ofwat is required to…ensure that Thames Water is able to finance the proper carrying out of its functions.”
This means price increases are necessary, adds the statement, to allow it to deliver the investment required in infrastructure.
Campaigners including Pop star Feargal Sharkey have labelled Ofwat a “shambles” over failures to regulate Water companies over issues of supply and environmental damage.
Ofwat is currently scrutinising the business model of all water companies, and will set a price control figure detailing prices for 2025 next year.
An Ofwat spokesperson said: “Companies have now set out their plans and how they intend to deliver and finance them. This is the first step of the process and we are scrutinising and testing those plans. Our initial view will be published in June with a final determination made in December 2024.”
Water industry executives have become increasingly frustrated at public criticism over sewage issues, which it claims is a result of regulators focusing on lower bills rather than higher environmental standards historically.
Thames Water also disclosed it was still subject to investigations from Ofwat and the Environment Agency over sewer overflows and environmental issues, with further financial penalties possible.
The company disclosed that its pollution record had “deteriorated” in the last year, with category 1-3 pollutions increasing 18% to 257 incidents.