Thames Water bosses face questioning from MPs
The utility company's trying to avoid going into temporary public ownership
Last updated 12th Jul 2023
Bosses at Thames Water have said customers will not face bigger bills to cover higher interest payments on its debts.
The troubled utility company's joint interim chief executives and its newly appointed chair have appeared in front of Parliament's Environment, Food and Rural Affairs Committee.
It comes days after Thames Water shareholders agreed to inject £750 million of new funding to bolster the firm's finances and stave off the threat of nationalisation. Last year the company had asked investors for £1 billion.
The company currently has a debt pile of around £14 billion and has faced higher interest on this debt as some of it is linked to the rate of inflation.
During today's hearing, the water regulator Ofwat has also stressed that the supplier's customers do not "pay a penny more" due to its recent poor performance and debt issues.
When asked whether these higher payments could result in bigger bills for customers, Cathryn Ross, the interim joint chief executive of Thames Water, said: "No. There is no mechanism within the current price controls to enable us to put up bills to reflect higher interest payments."
David Black, the chief executive of industry regulator Ofwat, also told MPs:
"That is evidenced by the fact they've had to inject additional funding into the company and have had very little in the way of dividends payments over the last seven years."
Ofwat will set the next price review for 2024 and the following five years, but this will be based on the needs of the customer and environment, not on Thames Waters' debt burden or costs of debt, it said.
Mr Black added: "Thames' customers don't pay a penny more of Thames' 80% gearing versus other companies' 60% gearing."
The Ofwat chief executive also said taxpayers would face some extra costs if Thames Water was placed into a so-called special administration regime (SAR), but that these would be far lower than those seen after the collapse of Bulb.
Speaking on Wednesday, Thames Water joint chief executive Alastair Cochran said leadership at the troubled supplier was "very focused on turning this business around".
"This business matters - it serves 15 million customers. Our job collectively is to turn this business around," he said.
"We know performance both operationally and financially hasn't been where it needs to be. We've been very transparent about that."
Last month, Thames Water's former boss Sarah Bentley, stepped down amid concerns over the firm's financial security.
Thames Water chairman Sir Adrian Montague told MPs: "I think Sarah's resignation was a surprise.
"I think she had got to the point perhaps of feeling that the burdens of office were considerable and it was an entirely personal decision, with which I think we had no involvement."
Last month the utility company was fined for a sewage spill near Gatwick in Surrey.