Cash-strapped Thames Water considers appeal against Ofwat bill cap

Thames Water bosses are considering an appeal against the regulator’s cap on bill increases as the troubled utility fights to avoid a ratepayer bailout.

Britain’s biggest water supplier was dealt a blow yesterday when Ofwat ruled it could charge customers 35 per cent more by 2029, not the 59 per cent it was asking for.

This could derail a rescue plan that seeks an “urgent” £3bn loan and a further £3bn cash injection.

Meanwhile, Ofwat fined the debt-ridden company £18.2m for more than £170m it paid in “unjustified” dividends which the watchdog said had breached shareholder payout rules.

And he promised to use new powers to recover £131.3 million of the payment. Thames may ask Ofwat to refer the decision on invoices to the competition watchdog in a bid to increase the amount it can charge for infrastructure works.

Yesterday he said he would “review” the regulator’s decision before making a statement in February.

The deadline for a referral to the Competition and Markets Authority is February 18.

An appeal would unblock a £1.5 billion loan from its creditors, the second half of a £3 billion rescue package that cleared its first hurdle at a court hearing this week.

At the High Court, the water supplier to 16 million homes in London and the south-east said it only had enough cash to survive until March.

Without an urgent loan, the Government would have to intervene to manage it as a “special administration regime”, the lawyers said.

The first payment of £1.5bn would see it survive until October, while the second half would provide a lifeline until May 2026.

The proposed loan has sparked a bitter battle between two groups of creditors, with a group of smaller bondholders opposing the deal.

The loan, which is subject to a further court hearing early next year, is separate from the £3bn in capital the company hopes to raise for the restructuring.

That process could be threatened by Ofwat’s ruling if it deters potential bidders.

Chief executive Chris Weston has said he is “comfortable” with the level of interest shown by potential investors, including investment firm Covalis, French utilities group Suez and Castle Water.

Thames Water said: ‘Given its importance and complexity, Thames Water will take the time to review the determination in detail before providing its response.

‘The company will set at the beginning of February the charges that will be applied from April.

These will reflect Ofwat’s final determination, and Thames remains committed to supporting customers who need help with their bills.’