Welsh Water wants to raise bills by £120 a year to fund huge investment programme

Welsh Water is seeking to increase average bills by around 26% or £120 a year by 2030 to help fund a record £3.5bn investment programme to improve water quality and reduce leaks.

In line with other water companies in England, the not-for-profit company has submitted its next five year (2025-30) business plan to water regulator Ofwat, outlining how it would use increased bills to improve its infrastructure and water quality.

Welsh Water said the level of investment would be a 68% rise on the current plan to 2025. The proposed investment across water firms in England and Wales would amount to nearly £100bn. There have been increasing calls for water firms to address their ageing infrastructure and growing concerns over sewage discharges into rivers and the sea.

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Welsh Water’s business plan has set out key aims, including:

However, Welsh Water said to fund the programme the average monthly bill will need to be £5 higher in 2025 (£60 annually), and £10 (£120 annually) by 2030.

Its business plan says: “Average bills for household customers will increase from a forecast £463 in 2024/25 to £581 in2029/30 (in 2022-23 prices, that is, not accounting for the impact of inflation), an increase of 26%.

The company said that research has shown that 84% of customers find the plan acceptable.

Welsh Water serves more than three million people across most of Wales, Herefordshire and parts of Deeside and Cheshire. Since 2001, it has been the only non-shareholder company in England and Wales – meaning that it returns the profit it makes to the benefit of customers.

However, it has been hit by the fact that a significant portion of its bond raising debt is inflation linked. Providing there is investor appetite it could be more financially efficient to raise debt through existing or new shareholders, which Welsh Water isn’t able to do unlike water companies in England.

Welsh Water chief executive Peter Perry said: “This is the most ambitious business plan we have ever developed, and as a not not-for-shareholder company, our customers’ interests and priorities are the foundation of our plan and everything we do. Whilst it presents a significant challenge we are confident that it is both deliverable and financeable and will help to improve our performance significantly over the coming years.

“We have been able to keep bills flat or falling in real terms over the last 10 years, but we now need to make a material investment in our water and wastewater systems to meet the challenges of climate change, protect our rivers, and improve the resilience of our water supplies. Our research shows that the majority of our customers accept that this investment is necessary and should not be postponed. For our part we will continue to drive innovation and efficiency of our operations to reduce costs wherever we can.

“We are only too conscious of how difficult the last few years have been for our customers and this is why our plan includes significant additional support for customers who are struggling to make ends meet.”

Welsh Conservatives Shadow Climate Change Minister, Janet Finch-Saunders MS said: “It’s completely unacceptable of Welsh Water to raise bills when customers already experience the second highest average bill in Wales and England. Along with this, the CEO’s salary is a whopping £332,000 (not including pension contributions and bonus payments). This will understandably frustrate and anger hard-working customers.

“As we regretfully know, nearly a quarter of all sewage discharges in the whole of England and Wales are in Wales, with Welsh rivers making up six of the top 20 rivers in England and Wales for the overall highest number of sewage dumps. Labour have let people down on sewage in Wales repeatedly. Having no environmental watchdog, after the horrendous incidences of dumping over the past year is unacceptable and they still haven’t published their storm overflow report which is now seven months overdue.”

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Alastair Lyons, chairman of owner of Welsh Water, Glas Cymru, said: “This business plan begins a multi-AMP (asset management plan) strategy to tackle our impact on the environment, in particular the quality of water in our rivers. It also aims to strengthen the resilience of our operations in support of the programmes on which we are already embarked to improve our performance where we currently fall short. We already see how climate change is challenging us in both these areas.

“We believe that the plan represents ambitious progress towards meeting the objectives of our long-term strategy Welsh Water 2050, while representing good value for customers in terms of what will be delivered. Our £3.5bn investment programme will also bring significant opportunities to increase our contribution to the Welsh economy, supporting thousands of jobs across Wales.”

Welsh Water said its business plan for 2025-2030 has been scrutinised by the Independent Challenge Group (ICG) to ensure that it appropriately reflects the priorities of customers as well as those of regulators and other stakeholders.

Chief executive of industry trade body Water UK, David Henderson, said: “While increasing bills is never welcome… approving the plans is necessary so that we can provide the highest quality drinking water for a growing population, ensure the security of our water supply… and reduce the use of storm overflows as much as a possible.”

Water campaign and former rock star Feargal Sharkey said: “The question is what’s happened to our money? Where has it gone? If they had used the cash to deal with sewage and build some reservoirs they wouldn’t be asking for such big increases now.”