Water bills 'might be hiked sharply'

20/10/2008

Higher water bills are likely to result from the credit crunch, the Observer reports.

Suppliers are currently locked in negotiations with regulator Ofwat over what they can charge customers over the next five years.

However, the firms - including Thames Water and Severn Trent - have a collective £27 billion to raise in order to fund improvements to infrastructure and other needs.

The likelihood of them raising the money from sources other than customer billing has been reduced dramatically by the crunch, with newly risk-averse banks hoarding their money against the downturn.

Indeed, funding plans given to Ofwat over the summer by suppliers suggested that they would be looking to fund their upcoming programmes through the capital markets - in other words, borrowing the money from the very institutional investors who have recently become so much more wary of lending.

Even in these initial proposals, bills were anticipated to rise by an average nine per cent over the five years.

Speaking to the newspaper, Mike McKeon at Severn Trent said: "In the current economic and financial climate this presents a challenge.

"The choice of capital markets are fewer than they were a year ago."

Tags; Current UK Economy, Young Family Finances, Recent Graduate Debt,

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