Thames Water placed in Ofwat 'special measures'

OFWAT was on course for a bruising collision with Thames Water today after the regulator took an axe to the company’s demands for a 44% rise in bills and placed it in a form of “special measures” that could lead to Britain’s biggest water utility being broken up.

- Jonathan Prynn

In their draft determination Ofwat bosses said they were unconvinced by Thames’s submission for the PR24 regulatory period and will only allow bills to go up by 23% in real terms over the next five years.

The decision comes two days after Thames Water’s boss Chris Weston said the company will effectively be bust by May next year when, without further investment from shareholders, it will reach the end of its “liquidity runway”.

The crisis blew up in March when shareholders, which include Canadian pension fund Omers, the British university staff pension scheme USS, the BT Pension Scheme manager Hermes, the Abu Dhabi Investment Authority, and the China Investment Corporation, said they would be withholding a £500 million injection, leaving a yawning hole in the company’s finances.

Thames has until 28 August to respond to Ofwat’s plans, which it has previously described as “uninvestable”, before a final decision in December.