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You can find the current article at its original source at https://www.theguardian.com/business/2023/jun/28/contingency-plans-reportedly-being-drawn-up-for-thames-water-collapse
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| Contingency plans being drawn up for Thames Water collapse | Contingency plans being drawn up for Thames Water collapse |
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| UK government and Ofwat holding discussions amid fears firm cannot survive because of its huge debt pile | UK government and Ofwat holding discussions amid fears firm cannot survive because of its huge debt pile |
| Contingency plans for the collapse of Thames Water are being drawn up by the UK government and the water watchdog, amid fears that Britain’s biggest water company cannot survive because of its huge debt pile. | Contingency plans for the collapse of Thames Water are being drawn up by the UK government and the water watchdog, amid fears that Britain’s biggest water company cannot survive because of its huge debt pile. |
| Ministers and Ofwat are holding discussions about the possibility of placing Thames Water into a special administration regime (SAR) that would take the company into temporary public ownership. | Ministers and Ofwat are holding discussions about the possibility of placing Thames Water into a special administration regime (SAR) that would take the company into temporary public ownership. |
| The news comes as the chancellor, Jeremy Hunt, met the competition and utilities regulators on Wednesday to discuss cracking down on any companies exploiting rampant inflation by raising prices and the possibility of increasing water bills by up to 40% to pay for tackling the sewage and climate crises. | |
| The SAR bailout process being mooted for Thames Water was last used in late 2021 when the energy supplier Bulb went bust. It was handed to a “special administrator” that had access to government funds to keep it running to supply gas and electricity to its 1.7 million household customers. A year later, Bulb was sold to the rival company Octopus Energy. | The SAR bailout process being mooted for Thames Water was last used in late 2021 when the energy supplier Bulb went bust. It was handed to a “special administrator” that had access to government funds to keep it running to supply gas and electricity to its 1.7 million household customers. A year later, Bulb was sold to the rival company Octopus Energy. |
| Asked about a possible Thames bailout, a government spokesperson said: “This is a matter for the company and its shareholders. We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would. | Asked about a possible Thames bailout, a government spokesperson said: “This is a matter for the company and its shareholders. We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would. |
| “The sector as a whole is financially resilient. Ofwat continues to monitor the financial position of all the key water and wastewater companies.” | “The sector as a whole is financially resilient. Ofwat continues to monitor the financial position of all the key water and wastewater companies.” |
| The talks between the Department for Environment, Food and Rural Affairs, Ofwat and the Treasury, remain at a preliminary stage and the contingency plans may not be acted upon, according to Sky, which first reported the news. | The talks between the Department for Environment, Food and Rural Affairs, Ofwat and the Treasury, remain at a preliminary stage and the contingency plans may not be acted upon, according to Sky, which first reported the news. |
| Darren Jones, the Labour MP who chairs the parliamentary business and trade committee, said Ofwat had a case to answer over the problems in the industry, and that he was “increasingly sick” of seeing the same failings. | Darren Jones, the Labour MP who chairs the parliamentary business and trade committee, said Ofwat had a case to answer over the problems in the industry, and that he was “increasingly sick” of seeing the same failings. |
| “We know that companies that are too important to fail must be regulated differently to other companies,” he told BBC Radio 4’s Today programme. “For too many years, decades even, we’ve allowed these companies to be operated with high-risk stakes, with high levels of debt, with wealth being extracted from the companies, with investment not being high enough.” | “We know that companies that are too important to fail must be regulated differently to other companies,” he told BBC Radio 4’s Today programme. “For too many years, decades even, we’ve allowed these companies to be operated with high-risk stakes, with high levels of debt, with wealth being extracted from the companies, with investment not being high enough.” |
| He added: “And then, once again, we’re in a situation where we’re being told that customers, taxpayers are going to have to pick up the bill for a failure of good corporate behaviour at these companies, and by the sounds of it poor regulation. | He added: “And then, once again, we’re in a situation where we’re being told that customers, taxpayers are going to have to pick up the bill for a failure of good corporate behaviour at these companies, and by the sounds of it poor regulation. |
| “These companies have been allowed to not invest for the future, even though we know in many ways what we needed them to do for the future, and the regulators have allowed them to get away with it.” | “These companies have been allowed to not invest for the future, even though we know in many ways what we needed them to do for the future, and the regulators have allowed them to get away with it.” |
| Following the surprise resignation of its chief executive Sarah Bentley on Tuesday, Thames is now being run by two joint interim chief executives – chief finance officer Alastair Cochran and Cathryn Ross, strategy and regulatory affairs director and a former head of Ofwat. Bentley stepped down a month after giving up her annual bonuses over its environmental track record. | |
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| The water company is struggling with a £14bn debt burden, the leakage rate from its pipes is at a five-year high and, like many of its rivals, it has been repeatedly fined over the discharge of raw sewage into rivers and missing targets on pollution and sewer flooding. | The water company is struggling with a £14bn debt burden, the leakage rate from its pipes is at a five-year high and, like many of its rivals, it has been repeatedly fined over the discharge of raw sewage into rivers and missing targets on pollution and sewer flooding. |
| Thames is owned by a number of pension funds and sovereign wealth investors including the BT pension scheme, the Canadian funds Omers and British Columbia Investment Management Corporation, the China Investment Corporation and the UK lecturers’ pension fund USS. Last summer they agreed to pump an extra £500m of equity into the business, with a possible £1bn to follow, to shore up the company’s finances. | Thames is owned by a number of pension funds and sovereign wealth investors including the BT pension scheme, the Canadian funds Omers and British Columbia Investment Management Corporation, the China Investment Corporation and the UK lecturers’ pension fund USS. Last summer they agreed to pump an extra £500m of equity into the business, with a possible £1bn to follow, to shore up the company’s finances. |
| Its former owner between 2006 and 2016, the Australian bank Macquarie, was accused of “asset stripping” as it extracted billions in shareholder dividends while Thames’s debt soared. | Its former owner between 2006 and 2016, the Australian bank Macquarie, was accused of “asset stripping” as it extracted billions in shareholder dividends while Thames’s debt soared. |
| Hunt is due to meet the Competition and Markets Authority and the watchdogs for energy, water and communications later on Wednesday. They are expected to discuss reports that water bills across England will rise by up to 40% to pay for the cost of tackling the sewage crisis. Citing public consultation documents, the Times said annual bills could increase from an average of about £450 to £680, plus inflation, in parts of the country by the end of the decade. | Hunt is due to meet the Competition and Markets Authority and the watchdogs for energy, water and communications later on Wednesday. They are expected to discuss reports that water bills across England will rise by up to 40% to pay for the cost of tackling the sewage crisis. Citing public consultation documents, the Times said annual bills could increase from an average of about £450 to £680, plus inflation, in parts of the country by the end of the decade. |