Ofwat comments on customer payments for Thames Tideway Tunnel

 

Following the publication of a report in the Financial Times Thames Water customers will have paid £540mn for London’s ‘Super Sewer’ on 27 April 2024, Ofwat has responded with the following statement:

The assertion (Report, April 27) that the Thames Tideway Tunnel project “makes consumers pay three times over” — which is made by one of those you interviewed for the piece “Thames Water customers pay £540mn for London’s ‘super sewer’” — is incorrect.

They pay only once for this £4.5bn asset; the cost being spread over the lifetime of the asset — much like the mortgage on a house.

Like mortgage payments, Thames Water’s current and future customers have in the past and will in the future contribute to the cost of financing the delivery of the Thames Tideway Tunnel (including a return on the capital provided by lenders and shareholders). This cost of capital is regulated and was competitively determined in 2015 and fixed up to 2030. Moreover, at 2.497 per cent the weighted average cost of capital was comparable to, or lower than, for other utilities despite the greater risk.

– Keith Mason, Ofwat Senior Director of Future Assets and Resources, including Thames Tideway