Ofwat to take fresh steps against Thames Water after license breach

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UK water regulator Ofwat plans to impose a series of measures against Thames Water after the UK’s biggest water utility breached its license conditions.

Ofwat said on Wednesday that it would appoint an independent monitor to report on the company, and told it to develop a new business plan, raise fresh equity and appoint new non-executive directors.

The company breached its license conditions after two rating agencies, Standard & Poor’s and Moody’s, cut its credit rating to junk.

“We are clear that Thames Water needs to remedy its license breach, turn around its operational performance and secure backing from investors to restore its loss of investment grade credit rating,” Ofwat’s chief executive David Black said in a statement.

The rating cut highlighted the deepening financial challenges facing the water company, which has previously admitted that its infrastructure poses a risk to public health and safety.

Thames, which provides water and sewage services to 16mn households in London and surrounding areas, is struggling under the weight of more than £18bn of debt.

The government has drawn up emergency plans that could see it nationalized — even if temporarily — under its special administration regime. Steve Reed, the Labor government’s new environment secretary, has insisted that it will not be nationalized because the company remains “financially viable.”

Thames said: “We remain focused on working with Ofwat to secure an investable PR24 determination, which is key to attracting equity into the business.”