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| Thames Water needs 'substantial' sums of money | Thames Water needs 'substantial' sums of money |
| (32 minutes later) | |
| The UK's largest water company Thames Water will need "substantial sums of money" to stabilise its finances, the water regulator has said. | The UK's largest water company Thames Water will need "substantial sums of money" to stabilise its finances, the water regulator has said. |
| Ofwat boss David Black said talks between the firm and investors to raise the extra funding were continuing. | Ofwat boss David Black said talks between the firm and investors to raise the extra funding were continuing. |
| The water firm, which serves a quarter of the UK population, is billions in debt and is under pressure to fix its finances after fears it could collapse. | The water firm, which serves a quarter of the UK population, is billions in debt and is under pressure to fix its finances after fears it could collapse. |
| There have been calls to nationalise the firm after its boss quit last week. | There have been calls to nationalise the firm after its boss quit last week. |
| "We need to see their revised business plan but we think it's substantial sums of money [that are needed]," Mr Black said, while being quizzed at a Lord's business committee. | "We need to see their revised business plan but we think it's substantial sums of money [that are needed]," Mr Black said, while being quizzed at a Lord's business committee. |
| Mr Black said problems were most acute at Thames Water, and that he did not see the same amount of issues at other companies. | |
| The hearing came hours after it was announced that Thames Water had been handed a £3.3m fine for discharging millions of litres of undiluted sewage into two rivers in Sussex and Surrey, killing more than 1,400 fish in 2017. | The hearing came hours after it was announced that Thames Water had been handed a £3.3m fine for discharging millions of litres of undiluted sewage into two rivers in Sussex and Surrey, killing more than 1,400 fish in 2017. |
| Thames Water has faced heavy criticism over sewage discharges and leaks. The company leaks more water than any other water company in the UK, losing the equivalent of up to 250 Olympic-sized swimming pools every day from its pipes. | Thames Water has faced heavy criticism over sewage discharges and leaks. The company leaks more water than any other water company in the UK, losing the equivalent of up to 250 Olympic-sized swimming pools every day from its pipes. |
| The company is also struggling with debts of nearly £14bn. | The company is also struggling with debts of nearly £14bn. |
| Why is Thames Water in so much trouble? | Why is Thames Water in so much trouble? |
| Water business should be simple - why isn't it? | Water business should be simple - why isn't it? |
| Amid fears that the water firm would collapse, the government said last week "a lot of work is going on behind the scenes" and that a process was in place "if necessary". | Amid fears that the water firm would collapse, the government said last week "a lot of work is going on behind the scenes" and that a process was in place "if necessary". |
| A few days later, one of the UK's largest private pension funds, Universities Superannuation Scheme (USS), became the first major investor to publicly back the firm to turn around its finances and performance. | A few days later, one of the UK's largest private pension funds, Universities Superannuation Scheme (USS), became the first major investor to publicly back the firm to turn around its finances and performance. |
| But Mr Black said there may not be an appetite from current investors to put further money into water companies. | But Mr Black said there may not be an appetite from current investors to put further money into water companies. |
| He said that the industry had built up too much debt from around 2006 and faced "deep seated challenges". | He said that the industry had built up too much debt from around 2006 and faced "deep seated challenges". |
| "I think we should have stepped in at that point to stop companies gearing up," he said, implying that water firms were taking on too much debt relative to equity, or available funds. | "I think we should have stepped in at that point to stop companies gearing up," he said, implying that water firms were taking on too much debt relative to equity, or available funds. |
| "We've changed companies' licences, we have got the powers to stop that happening now. | "We've changed companies' licences, we have got the powers to stop that happening now. |
| "At the time, we really didn't have the power to stop that happening," Mr Black said, adding that now Ofwat was "very much of the view" that companies need to reduce their debt to reasonable levels. | "At the time, we really didn't have the power to stop that happening," Mr Black said, adding that now Ofwat was "very much of the view" that companies need to reduce their debt to reasonable levels. |
| If the firm cannot secure investment, it could be placed under government administration until a new buyer is found. | If the firm cannot secure investment, it could be placed under government administration until a new buyer is found. |
| Members of the House of Lords quizzed Mr Black further about the health of water sector more generally and asked whether customers were likely to see their bills go up, given the £10bn investment water companies say they need to make to tackle sewage spills. | Members of the House of Lords quizzed Mr Black further about the health of water sector more generally and asked whether customers were likely to see their bills go up, given the £10bn investment water companies say they need to make to tackle sewage spills. |
| He said that he understood all water companies were "looking at requesting a bill increase" when they submitted their business plans to Ofwat later in the year. | He said that he understood all water companies were "looking at requesting a bill increase" when they submitted their business plans to Ofwat later in the year. |
| Mr Black added most firms were looking at "quite significant bill increases," but said the regulator was "yet to see the maths worked out." | |
| He explained Ofwat now had provisions to exercise more control over dividend payments, and said the regulator wanted to "change company behaviour" on executive pay, and make sure it was linked to performance. | |
| Related Topics | Related Topics |
| Companies | Companies |
| Ofwat | Ofwat |
| Thames Water | Thames Water |