Thames Tideway Tunnel
The GBP 4.2bn Thames Tideway Tunnel (“TTT”) project, a 25km tunnel to run beneath the River Thames in the centre of London, is the largest sewer improvement project to be conducted in the UK for over a century. TTT will be connected to 34 existing combined sewer overflows running along the River Thames which are owned and operated by existing water utility Thames Water.
PROJECT HIGHLIGHTS
Thames Tideway Tunnel is widely considered to be a landmark project and it has received broad recognition for some of its leading features. Some of the project highlights are considered to be:
• An innovative example of a substantive operating utility business contracting out a significant bolt-on project rather than undertaking the project itself.
• Competitive tender process for cost of capital achieved benefits for customers in an uncertain regulatory environment.
• Funding for the tunnel sourced via an additional charge to Thames Water customers estimated to be approximately GBP 20-25 (down from an initial estimate of approximately GBP 70) annually by the mid-2020s. The annual cost will be determined by the final Regulated Capital Value (“RCV”).
• Parallel procurement processes for construction contracts and the infrastructure provider ultimately linking them together.
• Construction arrangements contain an underspend / overspend arrangement between the three construction consortia, Thames Water, Thames Water sewage users and Tideway.
• Tideway will start generating revenue from day one of construction, coming from Thames Water wastewater customers based on the return from the RCV.
• Not all project debt secured at financial close due to length of construction funding period.
• Mechanism for Financing Cost Adjustment, to provide partial protection against movements in the cost of debt when secured, with some of the cost / saving to be passed on to Thames Water wastewater customers under certain circumstances.
