Thames Water Boss Defends Bonuses Payout Amid Swelling Debt and Poor Pollution Record

December 10, 2024 TruthUSA

Thames Water reported a 40 percent rise in sewage pollution to 359 incidents in the six months to September.

Thames Water’s chief executive has defended bosses getting £770,000 in bonuses despite the pushback by regulators and amid the firm’s growing debt and poor pollution record.

Chris Weston has said that Thames Water needs to “attract talent” by offering “competitive packages.”

He acknowledged that some customers “struggle with their bills” but added that the company offered bill support to about 377,000 customers in the last year.

Last month, water industry regulator Ofwat said it will directly block three water companies, including Thames Water, from allowing customers to pay £1.5 million in bonuses. This is the first year Ofwat’s new rules are being applied to hold the water and sewage industry to account.

Thames Water is in more than £16 billion in debt and needs at least £3.3 billion in equity over the next five years. It has faced increasing pressure since March, when investors deemed it “uninvestible” and withheld new capital.

Ofwat has put Thames Water into special measures, requiring the company to provide a “delivery action plan” setting out proposals on improving its performance on dealing with leaks and sewage spills.

In October, the utility provider secured a £3 billion emergency loan to maintain operations into 2025. Weston said the funding put the firm on a “more stable financial footing” as it seeks a long-term solution to financial resilience.

On Tuesday, he said that the firm reached “key milestones” in establishing a more stable financial position.

“The next critical step is receiving an investable Final Determination which is fundamental to our future,” he added.

Ofwat has previously rejected the company’s request to increase consumers’ water bills by 44 percent over the next five years. The regulator will deliver its final verdict on Thames Water’s five-year business plan on Dec. 19, which will include proposals for customer bill increases and investment.

Pollution Record

Thames Water continues to face scrutiny over its poor pollution record, including a £104 million penalty for failing to manage its wastewater treatment works and networks.

Ofwat has also ordered Thames Water to return £56.8 million to customers over its poor performance in pollution, leaks, and customer satisfaction.

The latest report on the company’s pollution record found a 40 percent rise in sewage pollution to 359 incidents in the six months to Sept. 30.

Weston attributed this to a particularly wet spring and summer period.

“After record rainfall and groundwater levels in our region, pollutions and spills are unfortunately up; however, we’ve been increasing pipe relining and cleaning, and the landmark Thames Tideway Tunnel, now in its testing phase, is already reducing overflows into the Tidal River Thames,” he said.

The company reported the capture of 589 million litres of sewage in a single 24-hour period by the Thames Tideway Tunnel and Lee Tunnel.

The Buyout

Thames Water is the subject of bids by several investment groups who are looking to acquire a debt-ridden provider.

Last week, the investment firm Covalis Capital, in partnership with France’s Suez Group, submitted a £5 billion bid to buy Thames Water out.

Covalis has stakes in major European infrastructure companies, including the German energy giant RWE. Suez, a leading water services provider in France with about 5,000 employees in the UK, would take on an advisory role in the partnership.

Its focus would be on helping Thames Water’s management modernize operations by implementing updated IT systems and advanced leak monitoring technology.

However, Suez would not hold any ownership shares in Thames Water. The government would retain a “golden share” in the company, granting it a seat on the board and additional special rights.

Another reported bid to acquire Thames Water was set to come from Castle Water, an independent business water retailer. The Scottish utility firm is co-owned by Conservative Party treasurer Graham Edwards and former investment banker John Reynolds.

According to PA news agency, Castle Water plans to propose £4 billion in return for a majority stake in Thames Water.

Other reported bids are expected to come from Hong Kong firm CK Infrastructure Holdings and private equity giant KKR, which together own stakes in Northumbrian Water.

PA Media contributed to this report.

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