THAMES WATER’S RESCUE PLAN – Customers are set to pay more but get less
UK customers could soon be paying more for less if a group of creditors gets the go-ahead for Thames Water’s proposed rescue plan.
The consortium, calling itself London & Valley Water, revealed the outline of its business plan and it says it wants to use about £20.5 billion of consumer cash to shore up the company’s core operations. But here’s the catch: that huge sum would actually deliver fewer projects than the deal already approved by the water regulator, Ofwat.
People close to the creditors argue that last year’s final determination from Ofwat — essentially, the detailed rulebook of what Thames can charge and deliver — simply wasn’t realistic. They claim their new plan is the only way to keep the company viable and avoid pushing the UK’s largest water supplier, which serves 16 million people, into temporary nationalisation.
The four-page plan summary mentions “significant write-offs” by investors but doesn’t specify just how much pain they’ll take. Instead, it promises to “fix the foundations” of Thames and create a pathway to close compliance gaps. Right now, talks with Ofwat are ongoing about how exactly the finances will be structured, including how deep the haircut will be for investors.
From there, the proposal heads to credit rating agencies — and Thames needs those agencies to restore it to investment-grade status, or it risks losing its licence to operate.
What hasn’t yet been disclosed is how much additional funding the creditor consortium itself will put in, beyond the billions expected from customers.
