Thames Water has been placed under special measures by the water regulator Ofwat as the struggling company fights for survival. Britain’s largest water provider, serving 16 million people in London and the South East, will now face stricter oversight from the regulator and must demonstrate the soundness of its finances.
This move comes as Ofwat authorized water companies across Britain to increase bills by an average of nearly £100 per year. The imposition of the turnaround oversight regime on Thames Water marks the first time Ofwat has had to step in and place a water supplier under such measures since its inception nearly 40 years ago.
Ofwat is also considering appointing an independent monitor to report on Thames Water’s financial status. The company is currently burdened with £15 billion of debt and has only £1.85 billion in cash to last until May 2025.
Thames Water disburses £196 million in dividends while its debts exceed £15 billion.
To exit the special measures, Thames Water must enhance its operational performance, including reducing sewage spillages and proving its financial health. Chief Executive Chris Weston is seeking an emergency rescue from a new consortium of shareholders, with Ofwat potentially stepping into the process.
The regulator may limit the amount of debt any new owners can take on and could introduce plans to break up Thames Water or list it on the London stock market if necessary.
Thames Water will only be permitted to increase its bills by 22%, under a draft ruling from Ofwat, which is half the 44% rise the company had requested to stabilize its finances. Thames had sought to raise bills by £191, from £436 to £627, but the regulator has approved only a £99 increase.
