Regulator Probes Rate Hike At Britain's Biggest Water Utility

Regulators are investigating an attempt by Britain's largest water and wastewater company to raise customer rates to support a "super sewer" project in London.  

Ofwat, the water regulator, is responding to a request by Thames Water Utilities Ltd. to raise bills at each household by around $46 per year, Bloomberg reported.

In its request to raise rates, the utility blamed "bad debts, an increase in Environment Agency charges and unexpected costs of buying land for the massive Thames tideway - 'super sewer' - project," The Guardian reported. 

So far, Ofwat does not seem impressed. It said it is closely scrutinizing the proposal, and criticized management decisions at the utility. "The regulator says Thames Water has underspent on sewer-flood and sewage-treatment works and failed to sufficiently maintain parts of its wastewater network," Bloomberg said. 

"We are looking to see if there are areas where we can claim back money for customers," Sonia Brown, chief regulation officer at Ofwat, said in a statement this week. 

The "super sewer" that the utility cited as a reason to raise rates is a controversial and expensive project that would provide the area with one of the largest sewer networks in Europe. 

The argument in favor of the sewer is "at least once a week raw sewage is dumped into the river Thames. Why then are we prioritizing transport and building projects ahead of cleaning up the river? Other major world cities, Stockholm, Vienna and Naples have sorted out similar problems. Why then is London lagging so far behind?" The Telegraph reported. '

The counter-argument is simple: cost. The pricetag on the project is 4.2 billion pounds, which, as The Telegraph points out, "is the same order of magnitude as the Olympics, a third runway for Heathrow or, the inevitable comparison, 10 new hospitals."

Boding poorly for Thames Water Utility, Ofwat has bristled at previous rate hike proposals by the entity.

"Thames Water is the only one of the 19 regulated water companies to ask for a supplementary charge and it follows an attempt in 2009 to raise bills by 19 percent. This earlier request was knocked back by Ofwat which allowed Thames to raise its bills by an extra 3 percent only," The Guardian reported.