By Neil Lock

As a customer of Thames Water, I recently received from them a very strange letter, referring to a bill they said they had recently sent me, and demanding an increase in my payments to them of 461% from 1^st April 2025. Since they had not in fact sent me any bill, I found this rather difficult to respond to. I therefore requested the bill in question, and set to work to analyze the figures. Warning: there will be numbers in this missive!

All this must be taken in the context of a recent determination by Ofwat, the government’s regulator of the privatized water and sewerage industry in England and Wales. The outline of the Ofwat decision can be found here: [[1]]. The section entitled “What our final decision means for customers’ bills” gives two figures of great relevance. First, the average household bill from Thames Water for 2024-5 was £436. And second, Ofwat’s estimate (not allowing for inflation) of average Thames Water household bills in 2029-30 was £588. This represents a rise of 34.9% over five years, not allowing for general inflation; or about 7% per year.

Now, I am no fan of government regulation of companies, unless those companies have been misbehaving. But the Companies House overview for Thames Water [[2]] shows much happening in the last year or so, that may or may not have been evidence of misbehaviour. For example, no less than seven directors, including two from the Chinese contingent, were terminated on 8^th and 9^th July 2024, which followed a further six terminations on 20^th May.

Yet, Thames Water has recently launched an appeal against Ofwat’s decision, which the BBC reports here: [[3]]. Thames Water claim they need a price hike of 53.5% over five years to cover the costs of investing in water infrastructure, while Ofwat allow them only 35%.

Moreover, if Ofwat’s numbers are to be believed, Thames Water’s demand to me for 2025-6 certainly looks like misbehaviour. For their “total new charges for this period” come to a whopping £1,064.95, 81.1% above Ofwat’s estimate of future average bills. And Ofwat’s estimate is for 2029-30, not 2025-6! The actual amount they are demanding is £1,183-25, well more than double last year’s original bill, and a fraction over twice Ofwat’s estimate for 2029-30. This can’t be right.

Having been trained as a mathematician, I set myself to work out, using Thames Water’s own published tables of charges, what the bills this year and last ought to have been, if those charges were indeed the ones approved by the regulators. I used their charges scheme documents for 2025-6 [[4]] and 2024-5 [[5]].

Now, my property was built in the mid-1980s. I have therefore been using, for almost 40 years, the traditional means of charging for water, unmetered and based on the rateable value (RV) of the property, as it was in 1990, when the system of rateable values was frozen due to the failure of Thatcher’s poll tax. In this scheme, there are four elements to the charges, which are summed to produce the total payable. There are two charges proportional to the RV, one for fresh water supply and one for wastewater and sewage; and two fixed charges, broken down into the same two components.

There is an additional complication, in that the boroughs served by Thames Water are divided into seven groups, and the rate of the charge per pound of RV is different for each group. Presumably, this reflects that, in 1990 when the RV system was frozen, RVs in boroughs like Kensington and Chelsea were a lot higher than where I live in Waverley; so, those in boroughs with lower RVs are charged more for water per pound of RV than those where RVs are higher. I can make no comment on the fairness or otherwise of this system. But as it happens, percentage changes in the rates per pound of RV have been kept in step since 2023 between the groups of boroughs, so these differences will not affect my calculations much.

The RV of my property is £274 (equivalent to Band D in council tax terms), so, as shown on the bill in front of me, the four components of the charge for 2025-6 are:

• Water used, 274*£1.8801 = £515.15.
• Wastewater removed, 274*£1.2485 = £342.09.
• Fixed charge for water, £78.88.
• Fixed charge for wastewater and sewage, £128.83.

Leading to the total of £1,064.95 that I quoted above.

When I repeated this calculation using the published charges for 2024-5, I got:

• Water used, 274*£1.3992 = £383.38.
• Wastewater removed, 274*£0.9305 = £254.96.
• Fixed charge for water, £51.92.
• Fixed charge for wastewater and sewage, £82.93.

Giving a total of £773.19. I was unpleasantly surprised to find that this total was already 77% above the Thames Water average for 2024-5 of £436 quoted by Ofwat. I live in a two-bedroom flat, not a mansion! Why am I already expected to pay more than three-quarters over the average for water, even before the latest rip-off hike?

But the number which appears as my total owed for the year 2024-5 is only £553.19. The £220 discount seems to have been a customer guarantee scheme payment of £180 for failing to supply water over three days in November 2023, plus two credits of £20, one for the failure to supply in the first place, the other for their failure to correct my account until March 2024. This makes my new charges for 2025-6 92.5% above the 2024-5 charge.

Thames Water did not help themselves by only demanding £128.29 for my October 2024 instalment, rather than the £276.59 implied by the yearly charge. Why they did this I do not know, but it may have been a mistaken attempt to apply for a second time the discount resulting from the events of 2023. This has resulted in a further demand for £148.30 (mitigated by a £30 discount for “letting you down.”)

To return to 2024-5 versus 2025-6. The total price hike, from £773.19 to £1,064.95, is 37.7%. This is a bigger hike, in a single step, even than Ofwat’s 35%, which is supposed to cover all five years up to 2029-30! This looks to me like a “fuck you” gesture from Thames Water to their customers, and a side-swipe at Ofwat as well. When I look at the individual rises, it looks as if the RV-dependent costs for fresh water and wastewater have gone up in a single step by 34% in all the boroughs, and the fixed costs have gone up by 52% and 55% respectively. I do hope that the court considering Thames Water’s appeal takes into account the company’s callous and selfish treatment of its customers, as well as their seeming attempt to score points against Ofwat.

In case this was discrimination against unmetered customers in order to force water meters on everyone, I checked also the price hikes from 2024-5 to 2025-6 for metered customers. For the per-cubic-metre component, this was 29% for fresh water, and 34% (again) for wastewater. The fixed components were even worse, with a 119% rise for fresh water, and 55% for wastewater. So, metered customers are being hit just as hard as unmetered.

I’m not sure what the most appropriate response to all this from the general public will be, but I expect to see a majority wanting Thames Water to go bankrupt sooner rather than later. Even a nationalized water supply system couldn’t be worse than this; at least, not initially.

[[1]] https://www.ofwat.gov.uk/wp-content/uploads/2024/12/Overview-of-Thames-Waters-PR24-final-determination.pdf

[[2]] https://find-and-update.company-information.service.gov.uk/company/02366623

[[3]] https://www.bbc.co.uk/news/articles/cy4m312ll24o

[[4]] https://www.thameswater.co.uk/media-library/home/help/billing-and-account/understand-your-bill/charges-scheme-2025-26.pdf

[[5]] https://www.thameswater.co.uk/media-library/home/help/billing-and-account/understand-your-bill/charges-scheme-2024-25.pdf

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