Government regulator appoints independent monitor to oversee Thames Water days after threatening £104m fine

The water regulator is to appoint an independent monitor to Thames Water following a series of issues with the firm.

Last month, breaches of Section 19 of the company’s operating licence led to its credit rating downgraded by financial firms Moody’s and Standard & Poor’s, giving the firm a negative outlook.

While it has enough funding in place to keep functioning until next year, what happens beyond that is still to be confirmed.

A spokesperson for Thames Water said last week: “We alerted Ofwat to the possibility of potential credit rating downgrades in April and continue to work with Ofwat to maintain the ongoing financial resilience of the business.

“Management is engaging with investors and its creditors and remains committed to seeking new equity funding and exploring all options to extend its liquidity runway.

“In the meantime, it’s business as usual for our customers and our teams on the ground who will continue to supply our services and remain focused on the delivery of our turnaround plan.”

The independent monitor will report on the Reading-based company’s progress against its transformation plan and have access to its information.

Ofwat will be kept informed of this, and steps being taken to turn the troubled company around.

The monitor is also tasked with confirming the steps being taken to deliver an equity raise, and look at any new appointments to Thames Water’s non-executive director board.

David Black, chief executive of Ofwat, said: “We are clear that Thames Water needs to remedy its licence breach, turnaround its operational performance and secure backing from investors to restore its loss of investment grade credit rating.

“These enforceable commitments will include our putting an independent monitor into the business, to report back to us on what is happening to drive meaningful change in performance, and to ensure appropriate expertise is added to their board.

“We will continue to monitor progress very closely and will not hesitate to take any further action if necessary.”

The decision to appoint the monitor comes days after Ofwat announced its intention to fine Thames Water £104m for failing to manage its wastewater treatment works and networks, leading to sewage being dumped in rivers, streams and seas.

A consultation will be launched into the severity of the fines, and the company has been told it must not seek to recover the money from its customers.

Mr Black said: “Looking to the future we want transform companies’ performance under our new price control that starts in April next year, so we reduce spills from sewage overflows by 44 per cent by 2030 compared to 2021 levels.”

While Thames Water has not commented on the independent monitor, it said it would cooperate fully with Ofwat over the potential fine.

A spokesperson for the company said: “We are encouraged that Ofwat recognises that in order to resolve the issues identified any redress needs to be deliverable, affordable and financeable.

“We will continue to engage with Ofwat and will respond to the consultation in due course.”

It also said an investigation by the Environment Agency into water companies is ongoing with no end date yet set.