Thames Water is under pressure from its shareholders to increase customer bills to address its current financial difficulties.
The shareholders, who were expected to invest nearly £4 billion in the company over the next two years, have withheld this funding, expressing concerns over the effectiveness of Thames Water’s proposed turnaround plan.
The shareholders consider Thames Water’s turnaround strategy “uninvestible” and call for regulatory approval from Ofwat for a substantial rise in water tariffs over the next five years.
The company said: “Based on the feedback provided by Ofwat to Thames Water to date, the regulatory arrangements that would be expected to apply to Thames Water in AMP8 make the PR24 plan uninvestible.
“As a result, the conditions of the support letter from July 2023 have not been satisfied and the first £500 million of the new equity that had been anticipated will not be provided by Thames Water’s shareholders by 31 March 2024.”
Chris Weston, Chief Executive Officer of Thames Water, said: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water.
“Our 8,000 staff remain committed to working with our partners in the supply chain to provide our services for the benefit of our customers, communities and the environment.”
In response to the announcement, an Ofwat spokesperson emphasised that safeguards are in place to ensure service continuity regardless of shareholder issues at Thames Water.
The spokesperson from Ofwat added: “Today’s update from Thames Water means the company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers.
“Thames Water is a business with a regulatory capital value of £19 billion, with £2.4 billion of cash/liquidity available, and an annual regulated revenue of £2 billon and a new leadership team.
“Ofwat’s PR24 price control will put customer and environmental priorities at the heart of the water sector.
“In order to drive this change, we need to ensure that the sector attracts investment and is fair to bill payers. Since 2020 nearly £4.6 billion new equity has been injected into the sector. We will set out our draft determinations in June this year.”
