Thames Water funding woes deepen after investment plan pulled
Shareholders say conditions imposed by the regulator make the turnaround plan “un-investible”
Troubled utility Thames Water has said its shareholders will not be injecting the first £500 million of funding that was agreed last summer into the group as industry regulations make its business plan "uninvestible".
Thames Water - the UK's biggest water supplier with 15 million households across London and the South East - said the funding plan drawn up last July was subject to conditions, including a business plan that is supported by "appropriate regulatory arrangements".
It said the regulations being imposed by industry watchdog Ofwat "make the PR24 plan "uninvestible", and as a result the shareholder support letter from last July "has not been satisfied".
"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," it revealed.
Thames Water said it was in ongoing talks with industry regulator Ofwat to secure regulations that are "affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors".
It said once the new regulatory plan is agreed with Ofwat, it "intends to pursue all options to secure the required equity investment from new or existing shareholders".
Ongoing battle to secure future
Thames Water has been battling to secure its future since last summer, with a funding crisis leaving the debt-laden firm on the brink of emergency nationalisation.
Last July, it agreed a rescue funding plan with shareholders - including the Universities Superannuation Scheme (USS), China's sovereign wealth fund, a Canadian pension fund and the BT Pension Scheme - that would see them pump in £750 million, with the first £500 million due by the end of this month.
But it is understood that Ofwat has refused to bow to the water giant's demands for concessions, said to include a 40% bill hike for customers, an easing of capital spending requirements as well as leniency on regulatory penalties.
Chris Weston, chief executive 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."
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