Thames Water Agreement
Thames Water, the largest supplier in Great Britain, has agreed a payment plan with the supervisory authorities to cover a record fine that threatened to worsen its financial difficulties. The company was to pay 24.5 million GBP of the amount of 122.7 million GBP by September 30.
Penalty Imposed by OFWAT
The penalty was imposed by OFWAT in May due to violations of its rules for wastewater discharges and dividend payments. The remaining amount would be due as soon as a rescue financing contract was agreed or if the government installed it into a special administrative regime.
Special Administrative Regime
It was revealed that Steve Reed, the Environment Minister, had signed the appointment of FTI Consulting to act as an administrator of the company should Thames not secure its rescue package from the private sector. The deal on the table would inject about 5 billion GBP of new capital and write off about 12 billion GBP in its capital structure.
Payment Plan
Thames initially had to pay the amount of 122.7 million GBP by August 20, but called for the agreement of a payment plan. The supervisory authority said that it determined a "backstop date" of March 31, 2030 for the remaining penalties. Thames argued that it needs financial space to guarantee that it is about to secure its rescue package.
Impact on Customers
Thames Water said that the fines would not be paid for from customer accounts. The company continues to work closely with stakeholders to secure market-based recapitalization that delivers benefits to customers and the environment as quickly as possible.
Regulatory Oversight
The agreement was announced when the water monitor is prepared to be switched off, according to the government, which plans to strengthen the surveillance of the industry. Lynn Parker, Senior Director of Enforcement at OFWAT, said that the payment plan continues to hold Thames Water to account for its mistakes, but also recognizes the ongoing stock collection and recapitalization process.
Focus on Operational Performance
The focus remains on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and to strengthen its financial resilience for the benefit of customers. OFWAT’s deal with Thames only steps down the street, and the company is working to secure its financial future.
