Thames bumps up spending but not bills in updated PR24 business plan

Thames Water has this morning announced it plans to boost PR24 spending by £1.1bn without this costing customers any more, and has proposed an additional £2bn conditional allowance on top.

This takes place against the backdrop of ongoing negotiations with Ofwat about its business plan for 2025-30, and negotiations with broader stakeholders about its wider financial future. Shareholders last month refused to provide new equity and called the PR24 plan “uninvestible” due to regulatory arrangements. Today’s announcement appears to offer more for customers, without additional bill pressure.

The company said it had submitted an update to its October 2025-30 business plan, which takes the proposed £18.7bn totex – which was already more than double PR19 spending – to £19.8bn. The extra investment would “be directed to projects benefiting the environment”. Moreover, according to a release this morning, “a rebalancing of operating and capital expenditures means there is no resulting increase in projected customer bills, which are estimated on average to be £608 by 2030”. This is exactly the level (a c40% rise) proposed in October.

Thames went on to say it would “continue to look for opportunities to deliver more investment in AMP8 and has proposed that a further £1.9bn of potential investment is placed into a ‘Deliverability Assessment Mechanism.’ This appears to be some kind of conditional allowance. Should this spend be possible, it would add a further £19 to bills over AMP8.

Ofwat has confirmed it expects to make its draft determinations public on 12 June.

• Last week, The Guardian reported what is claimed to be detail of the government’s Project Timber rescue plan for Thames. This featured the company being turned into an arm’s length public body akin to Crossrail, with most of its £16bn of debt added to public liabilities. According to The Guardian's report, parent company Kemble would fold and its lenders would not be compensated. Lenders to Thames Water itself could lose up to 40% of the value of their loans (with impacts varying by lender type), and Thames Water shareholders lose their entire investment. Thames may be broken up and potentially re-privatised subsequently. Clearly all of this remains speculative at this time; Thames and Ofwat have both said Plan A is for the existing company to secure new equity.