Water bills could rise faster than predicted, as the credit crunch is making it difficult for companies to secure the funding they need.
Experts are warning that smaller water companies, and those with a lower credit rating, could find raising the capital needed for investment almost impossible if the markets don’t recover.
The estimated £27bn required for investment needed for upgrades, maintenance and to comply with EU legislation will still have to be generated, so would most likely be passed on to customers through increased rates.
Water companies are already in discussions with watchdog Ofwat regarding setting the prices that consumers will be charged for the next five years. But the economic downturn has put their funding plans into disarray, as much of the investment was to be raised on the debt markets.
A spokesman for industry body Water UK admitted that the credit crunch could manifest in higher fundraising costs but stressed that companies would try to keep a lid on price rises.
