Thames Water blames its £14.7 billion debt pile on 'very low' bills

Thames Water bosses have blamed the company's financial problems on 'very low' consumer bills, as the group warned it did not have the resources to repay a significant loan due next year.

The beleaguered utility giant is struggling under the weight of a £14.7 billion debt mountain, putting it at risk of insolvency and a possible government bailout.

Sir Adrian Montague, chairman, told MPs on Tuesday that legal restrictions on price increases for customers were partly responsible for the company's financial situation.

Appearing before the Environment, Food and Rural Affairs Committee, Montague said: 'Some of the problems we are facing now are a result of bills being deliberately kept very low over the last period.

'It seems like a case of 'we'd say that, wouldn't we?' but there is truth in it.'

He also apologized for describing a £515 million loan Thames Water received from shareholders in March as “equity” at an earlier committee session.

Meanwhile, Thames Water's interim joint chief executive Alastair Cochran said the company does not have the cash to pay off a £190m loan due in April 2024.

He said: 'Our proposal to the lenders will be: 'Would you please extend the term because everything about Thames Water will be much clearer from a financial perspective after we receive Ofwat's determination.'

Thames Water has gone from being debt-free at the time of privatization in 1989 to one of the most indebted English and Welsh water companies.

Much of the debt was incurred during the period of ownership by financial services firm Macquarie Group, when it more than tripled from £3.4 billion to £10.8 billion.

Critics have accused Macquarie, dubbed the “Vampire Kangaroo” because of its history of asset stripping, of underinvesting in the businesses it invests in while taking out billions in loans and dividends.

Since Macquarie sold its last stake in Thames Water six years ago, the company's debts have continued to rise, partly due to interest rates pushing up financing costs.

Thames Water, like the rest of the water industry, has faced backlash due to its poor track record in tackling spills and sewage leaks.

It was responsible for more than a third of 'serious pollution incidents' in 2022, according to the UK Environment Agency.

Last week the group announced that the number of pollution incidents rose by 18 per cent in the six months ending September, while its financial results show pre-tax profits fell by more than half to £246.4 over the same period million.

Thames Water provides drinking water and wastewater services to around 15 million customers in London and South East England, making it England's largest water company.