Cash-strapped Thames Water is considering an appeal against the Ofwat law cap
Thames Water bosses are considering an appeal against the regulator’s law hike as the troubled utility scrambles to avoid a taxpayer bailout.
Britain’s biggest water supplier suffered a blow yesterday when Ofwat ruled it could charge its customers 35 percent more by 2029 – not the 59 percent it asked for.
That could derail a rescue plan as it seeks to inject an ‘urgent’ £3 billion loan and a further £3 billion of cash.
Meanwhile, Ofwat fined the debt-laden company £18.2 million while paying out £170 million in ‘unjustified’ dividends that the watchdog said had breached shareholder payment rules.
And it promised to use new powers to recover £131.3m of the payout. Thames could ask Ofwat to refer decisions on proposed legislation to the competition watchdog in a bid to increase the amount it can charge for infrastructure works.
Yesterday it said it would “review” the regulator’s decision before making a statement in February.
Bill rises: Thames Water suffered a blow when Ofwat ruled it could charge customers 35% more by 2029 – not the 59% it was asking for
The deadline for a referral to the Competition and Markets Authority is February 18.
An appeal would free up a £1.5 billion loan from his creditors, the second half of a £3 billion rescue package that cleared the first hurdle at a court hearing this week.
At the High Court, the water supplier to 16 million homes in London and the South East said it only had enough money to survive until March.
Without an urgent loan, the government would have to step in to make it function as a “special governance regime,” lawyers said.
The first payment of £1.5 billion would allow it to survive until October, while the second half would provide a lifeline until May 2026.
The proposed loan has sparked a bitter battle between two groups of creditors, with some smaller bondholders opposing the deal.
The loan, which is subject to a further court hearing early next year, is separate from the £3 billion in equity the company hopes to raise for restructuring.
That process could be jeopardized by Ofwat’s ruling if it deters potential bidders.
CEO Chris Weston has said he was “comfortable” with interest from potential investors, including investment firm Covalis, French utilities group Suez and Castle Water.
Thames Water said: ‘Given its importance and complexity, Thames Water will take time to review the decision in detail before responding.
‘The company will announce at the beginning of February which rates will apply from April.
These will reflect Ofwat’s final determination, and Thames remains committed to supporting customers who need help with their bills.”
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