The UK's largest water and wastewater services company, Thames Water, has announced it expected its bills to rise by about 3% a year above inflation.

However, the company said its £6.5bn investment plan would be the largest spending programme carried out by a UK water company.

The news comes as all the water companies across England and Wales submit their draft proposals for the five-year period starting from 2010 to regulator Ofwat.

United Utilities plans to increase prices by 2.7% above inflation and Northumbrian Water said its rise would be 1.3% above.

Welsh Water said its average household bills will only rise at the rate of inflation between 2010 and 2015.

Welsh Water has also said that it would invest £1.5 billion before inflation, or £1,000 per household on average during the period.

The firm's average household bill will be £390 before inflation.

United Utilities said its capital investment for the period would be £4bn, of which £1.6bn would be for water services while £2.4bn would be for water waste services.


Last year, Ofwat asked companies to produce a 25-year plans for maintaining and developing services.

Each company has been challenged to set its five-year business plan in the longer-term context, "demonstrating how it will deal with issues such as climate change, sustainability and meeting consumer expectations".

Ofwat's Chief Executive Regina Finn said: "This is the start of the process of making decisions on how each company proposes to provide value for money, long-term, high quality water services to its customers.

"Final decisions will not be made until autumn 2009. Between now and then we will be working intensively too provide the best possible basis for those decisions, including seeking customers views and carrying out detailed and thorough analysis of these plans."

Peter Antolik, Thames Water's Director of Regulation, told BBC Radio 4's Today programme that the "money was vital" to improve London's ageing water system.

"We have, we estimate, about 380,000 more people coming in to the region and we have to make sure that our infrastructure, our networks, our treatment works are all ready to cope with that influx of people."

Ofwat will meet each company in October and November this year to provide them with detailed feedback.

The regulator has also commissioned, with stakeholder partners, a major research project to find out what customers think of the proposals included in the plans.

Ofwat has said that increases in bills are projected to be 42% in real terms by 2010 since the privatisation of the water industry in England and Wales in 1989.

(DS)