Water firms have slammed a proposed cap on bill hikes, arguing it could create a risk of failures across the industry.
An average £19 a year ceiling “would likely result in significant investability issues for the sector as a whole,” a report from Oxera on behalf of industry body Water UK, due to be published on Wednesday, will say, according to BBC News.
“In particular, there is a material risk that the sector is unable to raise the new equity investment required to finance the proposed investment programme,” it will add.
Regulator Ofwat has proposed the cap, which would equate to an average 21% increase across England and Wales, to last until 2030, with a final decision due in December.
Such an increase is said to be just a third of what Water UK wants, with the report arguing firms will need to be profitable in order to attract investment.
This comes as London’s supplier, Thames Water, has emerged on the brink of renationalisation after racking up over £15 billion worth of debt.
The supplier, which serves around 16 million people, has struggled to attract funding from shareholders.
Ofwat’s draft proposal is set to come under business plans between 2025 and 2030, coinciding with tougher requirements on infrastructure upgrades after the sector has faced pressure on the likes of sewage spills.
A spokesperson said Ofwat would consider all responses to the proposals, acknowledging these would “likely reflect a diverse range of views”.