Ofwat has agreed to adjust the licence of Thames Tideway Tunnel, to ensure that the project can be completed after it was severely impacted by the Covid-19 pandemic and historically low interest rates. This follows two consultations last year on the proposals.
Without these changes there would have been uncertainty about Tideway’s ability to finance the project and complete it within the required timescales. The amendments provide greater certainty for both customers and investors.
These amendments will change how the project is financed. Costs to customers will no longer be affected by changing interest rates and additional costs caused by Covid-19 will be shared between customers and investors. The impact on bills of the project overall is still expected to be within the £20-£25 range first predicted when Tideway was announced in 2015, and these changes mean that bills will fall slightly this year.
Tideway is set up to deliver a single large construction project in a challenging environment in the centre of London. Because of this, Covid-19 has impacted the project far more extensively than any other water company with delays in construction and increases in costs. Ofwat are confident that the steps Tideway took at this the time to safeguard the project were in the best interests of customers and other options could have ended up costing customers a lot more.