Price rise plan could be reversed

Thames WaterPlanned price hikes by Thames Water could be reversed after the industry regulator attacked the company's performance and its demand for extra money.

Thames Water wants permission for a one-off bill increase of up to 8% in 2014/15 - equivalent to £29 - because more customers are struggling to pay their bills and it is having to fund a super sewer under London.
But Ofwat today turned the tables on the company, saying it is exploring whether it has benefited from ultra-low cost of borrowing for big corporations, and if it can claw back money for its 14 million customers.

Ofwat launched counter-claims against Thames Water as it believes it has made "substantial savings" by doing less than expected to tackle sewer flooding.

A major investment programme in sewage treatment has also dragged on too long, it said, despite customers being charged for the improvements.

And it said some of Thames Water's sewerage network is not hitting performance targets.

Ofwat chief regulation officer Sonia Brown said: "We have been clear that we would challenge Thames' proposed bill increase. So we are looking to see if there are areas where we can claim money back for customers."

The current average Thames Water household bill is around £354 a year.

Ofwat also launched a separate probe into whether the company, owned by a group of pension funds and institutions , has "benefited from wider economic circumstances beyond its control".

The probe is believed to centre on whether Thames Water has gained from the ultra-low interest rate environment, reducing the cost of servicing its huge debt pile.

It could deduct gains from Thames Water through a process called the "favourable effect mechanism" - although Ofwat said it is too soon to say whether this may result in lower bills for customers.

Thames Water sparked anger when it revealed the planned bill increase last month. It came just months after it emerged that the firm, whose revenues rose to £1.8 billion in the last financial year, paid no corporation tax.

It hopes to apply the price rise to next year, but has asked if it can spread out the charge over more than one year to avoid a spike in bills.

Thames Water is subject to a five-year price control period that runs out in 2015 but said it needs to ask customers for more to cover costs that could not be quantified at the time this was set in 2009.

It cited £273 million spent acquiring land for the Thames Tideway Tunnel, a major new sewer development.

And it said £16 of the extra £29 was accounted for by increases in bad debt - when customers failed to pay their bills - blamed on the economic downturn.

A Thames Water spokesman said: "We expected the regulator to set out the format for assessing our application. This is part of the regulatory process. We don't plan to comment until after Ofwat's draft decision, expected in mid-October."

Underlying pre-tax profits at Thames Water fell 20% to £144.9 million in the year to the end of March.

Thames Water is owned by Kemble Water Holdings, which was formed by Australian investment firm Macquarie Group and bought the utility group in 2006.

Much of Thames Water's income was spent on servicing huge debts, with interest payments of over £400 million over the year as borrowings increased from £7.8 billion to £8.4 billion.

A decision could be made in early November.

10 of the biggest consumer rip-offs
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Price rise plan could be reversed

Using a mobile phone to make and receive calls, send texts and browse the web while abroad can be extremely costly – especially if you are travelling outside the European Union (EU), where calls can cost up to 10 times as much as at home.

To avoid high charges, Carphone Warehouse suggests tourists ensure a data cap is in place, use applications to check data usage, turn off 'data roaming', avoid data-intensive applications such as Google Maps and YouTube and use wi-fi spots to update social networking sites.

Payment Protection Insurance (PPI) is supposed to help people to continue meeting their loan, mortgage or credit card repayments if they fall ill or lose their jobs. However, policies are often over-priced, riddled with exclusions and sold to people who could not make a claim if they needed to.

At one point, sale of this cover - which was often included automatically in loan repayments - was estimated to boost the banks' profits by up to £5 billion a year.
Now, though, consumers who were mis-sold PPI can fight back by complaining to the bank or lender concerned and taking their case to the Financial Ombudsman Service (08000 234567) should the response prove unsatisfactory.

It could be you, but let's face it, it probably won't be. In fact, buying a ticket for the Lotto only gives you a 1 in 13.9 million chance of winning the jackpot.

With odds like that, you would almost certainly be better off hanging on to your cash and saving it in a high-interest account.

No-frills airlines such as EasyJet may promote rock-bottom prices on their websites. But the overall fare you pay can be surprisingly high once extras such as luggage and credit card payment fees have been added - a process known as drip pricing.

Taking one piece of hold baggage on a return EasyJet flight, for example, adds close to £20 to the cost of your flight, while paying by credit card increases the price by a further £10.
It may therefore be worth comparing the total cost with that of a flight with a standard airline such as British Airways.

Cash advances, which include cash withdrawals, are generally charged at a much higher rate of interest than standard purchases.

While the average credit card interest rate is around 17%, a typical cash withdrawal of £500, for example, is charged at more than 26%.
What's more, as the interest accrues from the date of the transaction, rather than the next payment date, costs will mount up even if you clear your balance in full with your next payment.

Supermarkets such as Tesco and Asda often run promotions under which you can, for example, get three products for the price of two.

However, it is only worth taking advantage of these deals if you will actually use the products. Otherwise, you are simply buying for the sake of it, which is a waste of your hard-earned cash.
To avoid paying over the odds, it is also worth checking the price per kilo to ensure that larger 'economy' packs really are cheaper than the smaller versions.

Buy a train ticket at the station on the day of travel and the price is likely to give you a shock - especially if you are travelling a long distance at a busy time of day.

However, you can cut the cost of train travel by 50% or more by going online and making the purchase beforehand - especially if you book 12 weeks in advance, which is when the cheapest tickets are on sale.
Other ways to reduce the price you pay include avoiding peak times and taking advantage of so-called carnet tickets, which allow you to buy, for example, 12 journeys for the price of 10.

Most High Street banks offer packaged accounts that come with monthly fees ranging from £6.50 up to as much as £40, with a typical account charging about £15 per month.

Various benefits, such as travel insurance and mobile phone insurance, are offered in return for this fee. But whether or not it is worth paying for them depends on your individual circumstances.
Before signing up, it is therefore essential to check that you will make use of enough of the benefits, and that you cannot get them for less elsewhere.

Overseas money transfers or travel money purchases attract the same high rate of interest as credit card cash withdrawals.

Worse still, most credit cards – and debit cards – also charge you a foreign loading fee if you use them to make purchases while abroad.
You can, however, avoid these charges by using a Saga Platinum or Nationwide Building Society credit card.

Numbers starting 0871 cost 10p or more from a landline, while those starting 09 can cost more than £1 a minute from a mobile phone.

And the operators of these high-cost phone lines, some of which are banks, often get a cut of the call charges.
Most 09 numbers are linked to scams and should therefore be avoided at all costs, while 0871 numbers can often be bypassed by searching for an alternative local rate numbers on the
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