Struggling utilities firm Thames Water is reportedly moving closer to public ownership after the UK government rejected a £10bn rescue package for the business.
Government Rejects Rescue Terms
It is understood environment secretary Emma Reynolds wrote to water regulator Ofwat on Monday, stating that the current terms would place an "undue burden" on consumers. The deal, proposed last year by a group of Thames Water creditors, included an extra £1bn in investment and plans to write off about a third of the firm's near-£20bn debt pile.
Thames Water's Financial Struggles
Thames Water serves approximately 16 million customers across London, the Thames Valley, Oxfordshire, Berkshire, Wiltshire, and Gloucestershire. The company reported a £1.65bn annual loss in July and was fined £122.7m last year—the largest ever issued by Ofwat—for failing to comply with rules on sewage spills and shareholder payouts.
According to the Times, which first reported the news, the latest deal would have spared creditors London & Valley from performance penalties for four years in exchange for higher investment levels. However, a government spokesperson said the offer "does not do enough to protect consumers or the environment."
Potential Nationalisation
Thames Water and its lenders believe a market-led solution would be better for the business. If Ofwat does not approve a rescue plan—or if creditors withdraw—the company could be placed in a special administration regime, a form of temporary renationalisation.
Ms Reynolds is due to explain her decision to ministers later on Tuesday.
Thames Water Statement
A spokesperson for Thames Water said: "We remain of the view that a market-led solution is the best way to secure the long-term stability needed to continue improving performance and advancing our turnaround plan, for the benefit of customers, the environment and our stakeholders. Our priorities remain on providing safe, resilient services for customers, supporting our colleagues and working closely with suppliers, government and regulators."
If the company does collapse, households will still have drinking water and sewerage services. Ofwat has been contacted for comment.
