Tuesday, July 23, 2024

Thames Water fails to complete 108 upgrades to ageing sewage works

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Thames Water has failed to complete more than 100 upgrades to ageing sewage treatment works to meet legal pollution limits, the Guardian can reveal.

The schemes costing £1.1bn were supposed to cut pollution into rivers by increasing the capacity at sewage works, adding phosphorus removal to the treatment process, and installing new storm tanks. The upgrades, which were promised in 2018, are being paid for by customers as part of a five-year spending round to 2025 but will not be delivered within that timeframe.

Meanwhile, Thames Water awaits a crucial decision on Thursday from the regulator Ofwat on the company’s new five-year business plan. Thames wants to increase customer bills 59% by 2030 to pay for record investment of £19.8bn to tackle sewage pollution, leaks and water shortages after decades in which the company has sweated assets and underinvested.

The company is asking the regulator to allow the late projects to be rolled over into the new spending round, known as PR24.

Ash Smith, the founder of the campaign group Windrush Against Sewage Pollution, said customers had already paid for the projects to upgrade ageing sewage treatment works, and were being asked to pay again.

“Thames Water failed to deliver around 108 schemes that were funded in the last spending cycle and we question whether that a deliberate act to keep it financially afloat. A proper investigation into this company is long, long overdue.”

Smith added: “It has broken our sewerage infrastructure while extracting cash, right under the noses of regulators and the government.”

Industrywide, water companies are seeking to increase customer bills by up to 91% to pay record investment of £96bn. The new environment secretary, Steve Reed, has summoned water company chiefs to a meeting on Thursday after the Ofwat decision on the PR24 business plans.

As well as bill increases, Thames wants the regulator to agree to issue it with lower fines for pollution. Thames also wants Ofwat to increase a 3% limit on capital returns in order to attract vital investment as the company struggles to stay afloat with debts of more than £15bn. Thames has said average annual customer bills would be £608 by 2030.

Details of the failure to deliver the 108 upgrade projects on sewage treatment works across the network are contained in a deeply buried appendix to the PR24 business plan being considered by Ofwat.

The improvements to the treatment works were intended to fulfil a company target to reduce pollution to zero by 2025. But this week, Thames said sewage pollution had increased by 6% in the past year to 350 events, breaching its legal pollution target and mostly caused by delays to the upgrading of its sewage treatment works.

The 108 schemes included upgrades to stop sewage pollution into internationally significant chalk streams in the Cotswolds, where the headwaters of the River Thames rise.

The survival of Thames Water, which provides drinking water and sewerage services for 15 million customers, is to a large extent dependent on the decision on Thursday by Ofwat.

Thames is seeking new investors for fresh funds. The company said it would run out of money by next June without a cash injection, raising fears over its potential collapse.

Its chief executive, Chris Weston, this week blamed last year’s increase in pollution on a 40% rise in rainfall in 2023, saying the ageing treatment works could not cope.

But under the Climate Change Act 2008, all water companies were legally obliged to take appropriate action to adapt to the future impacts of climate breakdown, and to provide regular updates on their progress. Thames was first ordered to assess the impact of climate change on its longer term resilience in 2011.

The company has blamed the failure to deliver the 108 schemes on macroeconomic events including Covid-19 and the rise in inflation. Thames said supply chain problems were a reason for the delays, as well as pressure from the Environment Agency to force the company to create more storm tank capacity.

It said: “We have faced financial and delivery-related constraints which means that a number of schemes will be delivered late.”

The company said in its annual report this week: “After decades of underinvestment, it will take time to restore asset health to the level we expect and require.”

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