UK's Biggest Water Company Seeks Court Approval for Emergency Funding

Thames Water, the UK's largest water company, is seeking High Court approval for a £3bn rescue plan in a four-day hearing beginning on Monday. The indebted utility is seeking a judge's approval for a restructuring plan centered on an emergency loan it says it needs to avoid running out of cash by the end of March. The loan is being offered by existing "A class" creditors who hold around £11bn of the more than £16bn of debt racked up by Thames Water Utility Holdings, the regulated operating company that serves more than 15 million customers in London and the South East.

The company will argue that without court approval for the deal, it will be forced to enter a Special Administration Regime (SAR), overseen by the government at taxpayers' expense. Money blog: What it's like being a bouncer - including pay Water campaigners have criticized the terms of the loan, which is being offered at an interest rate of 9.75% over two and a half years with up to a further £100m payable in fees, and called on Environment Secretary Steve Reed to block it and force the company into special administration.

The loan will also be provided on "super-senior" terms, meaning it will be repaid first in the event of administration, and existing creditors will have repayment dates set back by two years. It will be opposed by a group of B class creditors, who hold around £750,000 of more junior debt and face being wiped out completely in a restructuring.

Read more from Sky News: Markets tumble in reaction to Trump's tariffs Beyoncé makes history at Grammys PM to urge EU to 'houlder more of the burden' on defence Please use Chrome browser for a more accessible video player 3:44 Water companies to increase bills The court hearing comes as Thames Water decides whether to appeal against the terms of a final determination from water regulator Ofwat, which allowed the company to increase bills by more than 30% from April. Thames had asked for bill increases of more than 50% to fund its operations and planned investments in new and improved infrastructure over the next five years. It is not yet clear whether Thames believes the Ofwat determination makes it an investable proposition.

Sources close to the process have told Sky News there remains "lots of uncertainty" over the Ofwat final determination and whether it can support the turnaround of the company. The £3bn loan, delivered in two tranches, is required to get the company to the other side of an appeal, which will be overseen by the Competitions and Markets Authority.

Secretary of State for Environment Food and Rural Affairs Steve Reed has today (11 July 2024) announced a series of initial steps towards ending the crisis in the water sector. As Ofwat publishes its draft responses on water company spending, the new measures represent a step change after years of failure to ensure the water industry cuts illegal sewage dumping and attracts major private-sector investment to upgrade infrastructure while prioritising the interests of customers and the environment. This afternoon the Secretary of State will also meet with water company Chief Executives to make clear that under this government water companies will be answerable for their performance for customers and the environment. He will set out his plans to work in partnership with the sector and investors to attract investment, jobs, and clean up the nation's polluted waterways. He has today announced:

After writing to Ofwat, the Secretary of State has secured agreement that funding for vital infrastructure investment is ringfenced and can only be spent on upgrades benefiting customers and the environment. Ofwat will also ensure that when money for investment is not spent, companies refund customers, with money never allowed to be diverted for bonuses, dividends or salary increases. Water companies will place customers and the environment at the heart of their objectives. Companies have agreed to change their ‘Articles of Association’ – the rules governing each company – to make the interests of customers and the environment a primary objective. Consumers will gain new powers to hold water company bosses to account through powerful new customer panels. For the first time in history, customers will have the power to summon board members and hold water executives to account. Strengthen protection and compensation for households and businesses when their basic water services are affected. Subject to consultation, the amount of compensation customers are legally entitled to when key standards are not met will more than double. The payments will also be triggered by a wider set of circumstances including Boil Water Notices.

Secretary of State for Environment, Food and Rural Affairs, Steve Reed said: We will never look the other way while water companies pump sewage into our rivers, lakes and seas. This unacceptable destruction of our waterways should never have been allowed, but change has now begun so it can never happen again. Today I have announced significant steps to clean up the water industry to cut sewage pollution, protect customers and attract investment to upgrade its crumbling infrastructure. That change will take time. Over the coming weeks and months, this Government will outline further steps to reform the water sector and restore our rivers, lakes and seas to good health.



The water industry is underperforming, and it needs to change. We know that people want and deserve more for their water environment. We are meeting this challenge head on. We want to be a modern, confident and efficient regulator. To enable this, a new model for regulation was developed with the launch of the Water Industry Regulation Transformation Programme (WIRTP) in 2023. It set out measures to transform the way we regulate the water industry to uncover more non-compliance and drive better performance from water companies. With additional funding secured following our water quality charges consultation earlier this year, we are building on our plans by further increasing capacity and improving capability. We will continue to uncover non-compliance and drive better performance from the water industry. Dedicated teams made up of new and experienced officers will focus on regulating the water industry. By March 2027 we will have 500 staff including environment officers, data analysts, enforcement specialists and technical experts as well as team leaders and managers to lead new regulation teams. We are also increasing our inspection and audit work substantially to understand the true scale of non-compliance. Inspections will rise significantly and we will carry out 4,000 by the end of March 2025; 10,000 in 2025/26 and 11,500 in 2026/27. This may mean we uncover more non-compliance, but this doesn’t mean impacts on the environment are going up, as we expect much of it to be ongoing historic issues. However, performance will initially look worse, but through increased enforcement activity we will work with the industry to improve compliance. More boots on the ground are a significant element of our programme, but alone won’t achieve the step-change in performance we need to see. We are investing around £15 million on enhancing our digital systems and tools to help identify the cause of issues, not just the symptom. We are improving existing tools and developing new ones that will enable us to receive, store, analyse and validate data. Data and information from lots of sources will be combined and we’ll have the ability to turn it rapidly into regulatory intelligence so that we can easily identify and tackle the highest priority issues. As part of a local voluntary water testing Environmental group we welcome any new measures that seek to improve on the results we see weekly. Electro- conductivity, Phosphate and, Nitrate levels are regularly showing very bad toxicity levels. The tide, really does need to turn. I believe it’s crucial to enforce implementation of the telemetry in wastewater treatment systems used in construction and infrastructure. This would give you the advantage to review the compliance with the discharge criteria at ANY time during operation unlike sampling testing regimes. Members of the House of Lords concluded their further scrutiny of the Water (Special Measures) Bill at report stage on Wednesday 20 November. The Water (Special Measures) Bill seeks to strengthen the power of water industry regulators and put failing water companies under special measures. Detailed scrutiny Report stage is an extra chance for members to closely scrutinise elements of the bill and make changes. Proposed changes Members speaking at report stage put forward amendments (PDF) to the bill on subjects including: natural flood prevention solutions Ofwat duties regarding climate change water company and regulator engagement with civil society. Votes There were four divisions (votes) on proposed changes to the bill. Members agreed to two changes on the timely reporting of water company financial structuring and the introduction deadline for Ofwat's rules on remuneration and governance. Two further proposed changes, on ensuring performance-related pay is not awarded retroactively and preventing consumers from incurring higher bills to offset the costs of the government's special administration orders, were voted on but disagreed to by Lords members. Catch up Watch the Parliament TV recording. Read the Lords Hansard transcript. Explore background information Find out more about the issues the debate covers in the House of Lords Library briefing. Next steps Third reading, a final chance to amend the bill, is scheduled to take place on Tuesday 26 November. What's happened so far? Committee stage Committee stage, a chance to thoroughly examine individual parts (clauses) of the bill, took place on Monday 4 November. Second reading Second reading, a full debate on the key principles of the bill, took place on Wednesday 9 October. Image: Pixabay