Thursday, July 25, 2024

Thames Water placed in special measures amid fears of collapse

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Thames Water has been placed into special measures by the water regulator Ofwat as the embattled business fights for survival. 

Britain’s biggest water company, which serves 16 million in London and the South East, will face more intrusive oversight from the regulator and have to prove its finances stack up. 

It came as Ofwat gave water companies across Britain permission to increase bills by an average of almost £100 a year.

The so-called turnaround oversight regime being imposed on Thames is the first time that Ofwat has been forced to step in and place a water supplier into a form of special measures since its formation nearly 40 years ago.

Ofwat said it is also considering the appointment of an independent monitor to report back to the regulator about the group’s financial status.  

Thames is drowning in £15bn of debt and has only £1.85bn of cash to keep it going until May 2025.

Thames must improve its operational performance to escape the regime, which could include cutting sewage spillages and proving its finances are in a healthier position.  

The company’s chief executive Chris Weston is seeking an emergency rescue by a new consortium of shareholders and Ofwat said today could also step into the process.

The regulator would be able to limit the amount of  debt any new owners take on, and introduce plans to break up Thames or list it on the London stock market if necessary.

Thames will only be allowed to increase its bills by 22pc under a draft ruling from Ofwat, just half the 44pc increase it had requested as it battles to shore up its finances.

Thames had requested a bill rise of £191 from £436 to £627 but the regulator said the company should be only allowed a £99 rise.

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