Ofwat launches probe into Thames Water over delayed environmental schemes

(Sharecast News) - Ofwat has launched an investigation into Thames Water, after the crisis-struck utility said over a 100 planned environmental protection schemes would not be completed on time. The debt-laden firm, which is currently battling to secure a deal with creditors and avoid re-nationalisation, told Ofwat it was unlikely to deliver more than 100 of the 812 improvements it had committed to carry out by 31 March.

Thames Water had agreed to deliver the schemes between 2020 and 2025 as part of the Water Industry National Environment Programme, a regulatory framework that lays out water companies' environmental obligations.

The regulator has therefore launched an enforcement case.

In a brief statement, it confirmed: "We will be investigating whether these matters amount to a failure by Thames Water to comply with its statutory obligation, and whether enforcement action is required."

Lynn Parker, senior director for enforcement at Ofwat, said: "Customers have paid for Thames Water to carry out these essential environmental schemes. We take any indication that water companies are not meeting their legal obligations very seriously.

"If we find reason to act, we will use our full range of powers to hold Thames to account for any failures, and will require them to put things right."

Thames Water warned the High Court last week that it only had enough cash to survive until 24 March.

It is seeking court approval for an emergency cash injection, which will see lenders provide up to £3bn in short-term loans while it completes a major restructuring.

Should it not receive approval, it will take a further step towards temporary re-nationalisation, the first water firm to do so since the industry was privatised in 1989.

It is also considering whether to appeal Ofwat's decision to allow it to hike bills by 35% over the next five years. Thames Water had requested permission to put up bills by 53%.

The company has faced a barrage of criticism in recent years. It paid out dividends to its owners - pension funds Omers and USS, as well as a number of sovereign and private equity funds = and executive bonuses, while building up a massive £19bn debt pile and failing to invest.

It has since admitted that its crumbling infrastructure now poses a risk to public health and safety and will cost billions to fix. Thames Water has repeatedly been fined for sewage spills and leaks.

It also told the High Court last week that it is currently spending around £15m a month on lawyers and other advisers, and said the eventual restructuring bill could top £200m.