Thames Water 'plans being drawn up' for collapse of biggest water supplier
Emergency plans are reportedly being drawn up by the Government for the collapse of Thames Water as concerns grow over the utility company’s £14billion debt.
Thames Water is the biggest water supplier in the UK and covers 15 million people in London and the South East.
But the firm, which is owned by a consortium of pension funds and sovereign wealth funds, has come under pressure in recent years over sewage spills.
Ministers are reported to be in talks about bringing Thames Water back into temporary public ownership under a special administration regime (SAR).
This is the same process that was used when energy supplier Bulb collapsed in 2021 before it was sold to rival company Octopus Energy and meant customers saw no disruption in their supply.
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It was originally feared the collapse of Bulb could cost taxpayers billions of pounds - but Octopus Energy claimed earlier this year that the bailout will be considerably lower to the tune of £260million.
Sarah Bentley has quit as Thames Water chief executive (PA)Sky News reports that talks over the future of Thames Water are taking place between water regulator Ofwat, the Department for Environment, Food and Rural Affairs (Defra) and the Treasury.
However, the plans are said to be at an early stage and may not be put in place.
Other reports suggest Thames Water is looking to raise £1billion from investors, with AlixPartners said to be advising the firm on turnaround plans.
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Work and Pensions Secretary Mel Stride said he was confident customers would not see any disruption to their water supply.
Appearing on LBC radio, he indicated the Government and the regulator Ofwat were prepared for any eventuality.
He said he could not speculate on the specific company, but added: "Ofwat has as part of its remit a requirement to look at the resilience of the entire sector and will have been looking at and continue to look very closely at Thames Water.
"Government as well has contingency arrangements in place to cover any scenario which may play out and what I'm supremely confident of is whatever the situation is at Thames Water, the water will continue to flow."
Mr Stride would not say whether the Government would bail out Thames Water, but added: "There will be numerous conversations going on between Ofwat and Government, and Government and that company, and the company and Ofwat, I've no doubt, but as I say I can't speculate on exactly what's going on at the moment.
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"I can reassure your listeners that contingency plans will be well advanced and are there through time, generally, for that sector."
It comes after Thames Water chief executive Sarah Bentley quit this week after two years in the role, weeks after giving up her bonus over sewage spills.
But the chief executive still saw her pay double to £1.5million, even after giving up her bonus.
On announcing her departure, she said: "The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance."
The leakage rate from Thames Water pipes is said to be at its highest level in five years - and the company is not expected to meet its target to plug the leaks this year.
This is according to information obtained by The Guardian, which suggests the leaks are estimated at 630m litres a day.
Thames Water recently pledged to invest £1.6billion in its sewage treatment works over the next two years, as part of wider plans to halve its discharges by 2030.
Chief finance officer Alastair Cochran will now take over as interim co-chief executive, and will run the company along with Cathryn Ross, former Ofwat chief executive.
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.”
An Ofwat spokesperson said: “We monitor the financial position of all the key water and wastewater companies.
“We have been in ongoing discussions with Thames Water on the need for a robust and credible plan to turn the business around and transform its performance for customers and the environment.
“We will continue to focus on protecting customers' interests.”
Thames Water said: "As envisaged in June 2022, Thames Water received the expected £500million of new funding from its shareholders in March 2023 and is continuing to work constructively with its shareholders in relation to the further equity funding expected to be required to support Thames Water's turnaround and investment plans.
"Ofwat is being kept fully informed on progress of the company's turnaround and engagement with shareholders.
"Thames Water remains focused on delivering for its customers, the environment and stakeholders.
"Thames Water continues to maintain a strong liquidity position, including £4.4billion of cash and committed funding, as at 31 March 2023."
Meanwhile, water bills are reportedly set to go up by as much as 40% with companies said to be outlining plans to increase household costs between 2025 and 2030.
Companies have said they need the extra money to meet sewage targets imposed on them, The Times reports.
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