THAMES Water will not be cutting its prices, despite seeing its profits rise by 50 per cent. But it will plough the cash into investing in its pipelines and renewing Victorian sewage systems, say company managers.

Following the threat of a £12.5m fine by regulator Ofwat in September for customer service failings, Thames Water has laid 266km of new water mains since April this year, well ahead of its target of 362km by the end of the financial year.

Its poor leakage record was brought into focus last year when the company was forced to apply for a drought order after several months of below-average rainfall. Pre-tax profits for the six months to September 30 came in at £199.7m. This followed price rises agreed with regulator Ofwat.

Thames Water spokesman Ross Edwards said: "The profits will be channelled back to the customer in terms of improved service and investment."

An Ofwat spokesman said: "We will monitor Thames Water to ensure it delivers on its obligations and customer performance standards."

The company said it expected to invest £1bn on improving its network and facilities in the current year, including £243m on replacing London's Victorian mains.

Chief executive David Owens said: "The legacy of high operating costs and inefficient working practices has now been put behind us.

"The past nine months have seen the company make huge strides to address the issues which really matter to our customers and stakeholders - tackling leakage, improving customer service and providing consistently excellent water quality."