Thames Water shareholders are taking a stand and refusing to provide extra funding to the ailing company unless bills increase. The company’s owners had committed to an investment of £500m by the end of March but have retained the money, citing uncertainty over the company’s recovery plan. Shareholders are demanding the regulator Ofwat approve substantial billing increases for Thames customers over the next five years.
Fears arose last year that Thames Water could collapse due to the company’s substantial debt. Thames’ long-term plan, unveiled last July, was contingent upon meeting customer and environmental improvement standards over the next three years. The owners’ business plan initially requested a rise in customer bills of 40% over the next five years, but they believe they may have to agree to even higher bills in exchange for shareholder financing.
Despite rumoured pressure to increase customer bills to address the company’s debt problems, insiders suggest Ofwat will “stick to their guns” and not be coerced into approving higher bills. The government has previously stated that if necessary, it will take over Thames Water, which serves 15 million households particularly in London and southern England. However, Ofwat’s safeguards ensure that services and protection to customers are maintained, regardless of shareholder issues with the company.
Ofwat stresses the industry’s obligations to be “fair to bill payers” and the need for improved company performance, meeting customer expectations for consumer trust. Despite the refusal of shareholder financing, Thames Water maintains solvency for the short-term and is projected to remain functional for at least the next 18 months without nationalisation
Read the full article from The BBC here: Read More