Ofwat is ready to reject the majority of water companies' proposals to increase consumer bills, granting some only half of their requested amounts.
The water regulator for England and Wales, Ofwat, has officially postponed its decision until July 11 due to the general election. This decision, termed a draft determination, arrives amidst an escalating crisis in the water industry.
Thames Water, the largest water utility in Britain serving over 16 million customers in London and the Thames Valley regions, is at risk of nationalisation unless it secures significant fresh capital. The company has asked for bill increases of 59% - adjusted for inflation - from the regulator.
Ofwat has dismissed these figures, citing shortcomings in Thames's business and turnaround plans. Sources reviewing the documents described them as hastily prepared, with unreliable estimates, suggesting a lack of urgency from the board.
Whitehall officials are growing increasingly worried about the politicisation of potential nationalisation efforts. Denationalizing Thames would entail transferring most of its £15 billion debt to the UK's balance sheet, posing challenges for a government already grappling with tight public finances.
To navigate this delicate situation, Ofwat is seeking guidance from investment bank Lazard. Their aim is to find a solution that balances investor attractiveness for Thames Water while also mitigating the impact on consumer bills, according to sources familiar with the matter.
