Thames Water bosses are considering an appeal against the regulator’s cap on bill increases as the troubled utility scrambles to avoid a taxpayer bailout.
Britain’s biggest water supplier was yesterday dealt a blow when Ofwat ruled it could charge customers 35 per cent more by 2029 – not the 59 per cent it asked for.
That could derail a rescue plan as it seeks an ‘urgent’ £3billion loan and a further £3billion cash injection.
Meanwhile Ofwat fined the debt-laden firm £18.2million over £170million it paid out in ‘unjustified’ dividends that the watchdog said had broken shareholder payment rules.
And it vowed to use new powers to claw back £131.3million of the payout. Thames can ask Ofwat to refer the decision on bills to the competition watchdog in a bid to hike the amount it can charge to pay for infrastructure works.
Yesterday, it said it would ‘review’ the regulator’s decision before making a statement in February.
Bill hikes: Thames Water was dealt a blow when Ofwat ruled it could charge customers 35% more by 2029 – not the 59% it asked for
The deadline for a referral to the Competition and Markets Authority is February 18.
An appeal would unlock a £1.5billion loan from its creditors, the second half of a £3billion rescue package that passed its first hurdle at a court hearing this week.
At the High Court, the water supplier to 16m households in London and the South East said it only had enough cash to survive until March.
Without an urgent loan the Government would have to step in to run it as a ‘special administration regime’, lawyers said.
The first £1.5billion payment would enable 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 a set of smaller bondholders opposing the deal.
The loan, which is subject to a further court hearing early next year, is separate to the £3billion in equity the company is hoping to raise for restructuring.
That process could be put at risk by Ofwat’s ruling if it deters potential bidders.
Chief executive Chris Weston has said he was ‘comfortable’ with the level of interest shown by potential investors, including investment firm Covalis, French utility group Suez and Castle Water.
Thames Water said: ‘Given its importance and complexity, Thames Water will take time to review the determination in detail before making its response.
‘The company will set out by early February the charges that 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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