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Thames Water has urged regulator Ofwat to sign off on a business plan that will make the company “investable”, as the utility vowed to raise the new equity it needs to stave off collapse.
The company, which provides water and sewage services to about 16mn households, has spent the past year fighting to avoid a temporary nationalisation.
Chief executive Chris Weston said on Tuesday that he believed a “market led solution that increases financial resilience is in the best interests of all stakeholders, but it is dependent on securing a final regulatory determination that is deliverable, financeable and investable, as well as affordable for our customers”.
The prospect of attracting private investment is likely to hinge on the degree to which Ofwat allows Thames to push through steep increases in household bills. Thames Water wants permission to raise average household bills by 59 per cent between 2025 and 2030, as part of its five-year business plan.
The regulator, which has come under fire for being too lenient on sewage spills, is expected to deliver its initial verdict on the plan on Thursday but is unlikely to approve all of the increase Thames is seeking.
The call from Weston came as Thames said that net debt at the entity regulated by Ofwat had climbed to £15.2bn at the end of March, up from £14bn in its previous financial year. The group reported an underlying pre-tax profit of £204mn for the period, up from a loss of £83mn in the previous financial year.
Thames Water’s predicament has worsened as it has strained to service its debt, absorb a jump in costs and deliver a plan to reverse years of under-investment in its ailing infrastructure.
The company said it had £1.8bn in liquidity, enough to cover its operations to the end of May 2025.
Thames is under growing pressure to secure new investment after shareholders, who include Chinese and Abu Dhabi sovereign wealth funds as well as UK and Canadian pension funds, in March said the company was “uninvestable” as they backtracked on a promise to inject £500mn.
The group’s perilous position has made it one of the first big tests for the new Labour government, which has vowed to take tough action against water companies for sewage pollution.
During the election campaign Jonathan Reynolds, now the business secretary, said that Labour would not want to return Thames to public ownership, without specifying the approach the party would take if the utility failed to find new backers.
A potential alternative to nationalisation would be a new “recovery regime” drawn up by Ofwat, which would bring closer supervision but come with a set of measures intended to encourage the company to upgrade its infrastructure.
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