Thames situation update

Thames Water investors may be poised to announce some kind of equity support for the struggling company, some reports over the weekend suggested, though the precise details were unclear at the time of writing.

There were few material developments in the Thames case last week, save the addition of a £3.3m fine for a 2017 pollution near Gatwick and uproar over water quality in the Thames ahead of the Henley Regatta, which compounded the company’s reputational woes.

However, articles and comments about the financial resilience, operational problems and regulation of both Thames specifically and the wider industry continued to abound in the press throughout the week.

There was particular scrutiny of Ofwat following chief executive David Black’s appearance at the House of Lords Industry and Regulators Committee evidence session last Tuesday, with most subsequent headlines focusing on why the regulator had not stepped in to control borrowing sooner; the reluctance of Thames’ shareholders to put more equity in; and the prospect of bill rises from 2025.

There continued to be considerable debate over whether taxpayers should be liable, should Thames in the end need a bailout; and over whether customers should pay at all to address sewage discharges.

Other notable stories of the week included on Southern’s rating downgrade and dividend lock up; a report in The Guardian on South East Water’s dividend and debt payments, topical because of the company’s recent supply outages and hosepipe ban; and an investigation by The New Statesman claiming “UK water companies have failed to replace three million toxic lead pipes”.