Cathryn Ross, the joint interim chief executive of Thames Water, has rejected any insinuations that her past oversight as head of the industry regulator contributed to the current financial predicament of the company.
During her time leading Ofwat from 2013 to 2017, the industry was marked by substantial borrowing. Now, with the increase in interest rates, the cost of servicing such debts has become burdensome, pushing Thames Water, which carries debts amounting to £14bn, into a financial crisis.
Addressing the Environment, Food and Rural Affairs Committee, Ms Ross was charged with abetting the crisis by permitting substantial borrowing during her tenure at Ofwat. Rejecting such accusations, she stated that she did not “accept that characterisation”.
When Darren Jones MP of the Labour Party asked if she would issue an apology, Ms Ross flatly declined, saying, “I won’t apologise for my role at Ofwat, no.”
Just last month, Ms Ross was called upon to lead the largest water company in Britain following the sudden resignation of its former chief, Sarah Bentley. Amid this, she has also forecasted a rise in household water bills next year.
The unexpected resignation of Thames Water’s former chief last month took Chairman Sir Adrian Montague by surprise, he confessed to MPs. He elaborated, “I believe she possibly felt the weight of her responsibilities was substantial and her decision to leave was entirely personal, in which we were not involved.”
This departure unfolded against a backdrop where Thames Water was revealing its need for billions in investor funds. This situation triggered the government to draft emergency nationalisation plans as a fallback.
Beyond the escalating debt costs, Cathryn Ross, the joint interim chief executive, indicated that there’s a “significant requirement for more investment” in Thames Water’s fundamental operations, necessitating a rise in customer bills to secure funding.
Ross stated, “Our assets lack the resilience that our customers and the environment expect. Additionally, we have significant new infrastructure needs in response to climate change, adaptation, and demographic shifts. Regrettably, under the current model, the customer is the ultimate source of funding for these expenses.”
Ross reassured that the revenue from increased bills would solely be directed towards investing in Thames Water’s operations and would not be used for debt interest payments.
Earlier this week, Thames Water managed to secure £750m from investors to strengthen its balance sheet, falling short of its £1bn target. The company announced it would need over £2bn more in shareholder investment in the forthcoming years.
David Black, the current Ofwat chief, disclosed to the environment committee that Thames Water’s financial situation continues to face “significant issues.”
The water sector has been condemned for disbursing hefty dividends in the past while debt surged significantly.
Alastair Cochran, serving as Thames Water’s joint interim CEO alongside Ms. Ross and acting as its CFO, justified these dividend payouts.
Addressing the MPs, he stated, “Our shareholders, who consist primarily of pension funds from the UK and Canada, making up over three-quarters of them, necessitate our vigilant attention to yield returns so they can provide their pensioners with their due pensions.”
Mr. Cochran also assured that he and his colleagues were committed to reviving the company.
He confessed, “It is evident that our operational and financial performance has been under par. We’ve been very forthright about this.”
