19th Dec 2024 08:02
(Alliance News) - Thames Water is to be allowed to hike consumer bills by 35% by 2030 following a decision by the industry regulator, as it was also handed an GBP18.2 million fine for paying "unjustified" dividends to shareholders.
The average annual bill will rise to GBP588 by 2030, Ofwat said, up from current levels of GBP436.
The ruling falls well short of the 59% Thames Water had said it needed in the run-up to the decision, as the embattled water company tries to negotiate a bailout.
The company, which serves about 16 million people in London and the South East, is in the grip of a funding crisis and needs a GBP3 billion loan from creditors to keep operating beyond March.
Ofwat said the GBP18.2 million fine was for paying GBP158.3 million in dividends to shareholders which it said were not justified.
The regulator said it will claw back GBP131.3 million of the payments so it does not come out of customer bills.
Ofwat chief executive David Black said the penalty was "a clear warning to the whole sector".
He added: "We will take action against companies who take money out of these businesses, where performance does not merit it."
Thames Water is in more than GBP16 billion-worth of debt, and earlier this week held the first of several high court hearings over its proposed GBP3 billion bailout.
The cluster of investment firms that drew up the deal – including BlackRock Inc, abrdn PLC and M&G PLC – have said they need a sizeable increase in bills to make it happen.
It is unclear whether the 35% bills hike will be deemed enough for the bailout to go through, after the investors had also been in talks with Ofwat in recent weeks.
However, Thames Water will have the option to refer Ofwat's decision to the Competition & Markets Authority.
That would kick off a fresh process which could see consumers wait months more to find out how much they will have to pay over the coming years.
By Alex Daniel, PA Business Reporter
source: PA
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