Company allowed to invest 16.9 bln pounds over 5 yrs (Il Sole 24 Ore Radiocor) - London, 11 Jul - The UK water regulator Ofwat said that placing the troubled company Thames Water into a surveillance regime.

"Given concerns about the performance of the company, Ofwat is imposing a Turnaround Oversight Regime on the company," the regulator said.

Ofwat said that it has allowed Thames Water 16.9 billion pounds to invest on improving services for customers and the environment between 2025 and 2030. Around 20% of the 16.9 billion pounds funding "is conditional on the company demonstrating it is ready and able to effectively deploy investment or that the investment will be effectively and efficiently targeted. This is in addition to the price review process that will see customers' money clawed back if investment is not delivered." Under the surveillance regime, Thames Water has to provide a "delivery action plan". The company must report on its progress regularly, subject to review and additional scrutiny by an independent third-party assurance provider, Ofwat said.

The company must also "fully re-evaluate its plans for transformation in order to demonstrate how it will deliver the necessary step change in operational performance." Thames Water also has "to provide a financial resilience plan in response to the draft determinations. We will continue to monitor and engage with the company on its financial resilience," Ofwat said.

The regulator added that it is considering appointing an independent monitor to oversee and report on the company's progress, including against its transformation plan. The independent monitor would report back to us and be entitled to full access to company information, it noted.

Ofwat's 16.9 billion pound package is the response to Thames Water's proposal to increase water bills by 44% by 2030 to finance 22 billion pounds in investments.

The package offered to Thames Water is part of a larger 88 billion pound spending package offered to UK water companies by the regulator.

To finance the investments, Ofwat will increase the average bill for water and wastewater companies will by 19 pounds a year over five years, for a total of 94 pounds excluding inflation. The regulator noted that companies' business plans proposed increases averaging 144 pounds over five years.

Ofwat highlighted that Thames Water's proposed increase of 191 pounds by 2030 has been reduced to 99 pounds and Severn Trent's proposed increase of 144 pounds has been reduced to 93 pounds.

Ofwat is holding a public consultation on the proposed spending package until August 28.

The regulator expects to publish its final decisions on December 19. If companies do not agree with the final decisions, they have two months from the date of publication to ask for an appeal to the Competition and Markets Authority.

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(RADIOCOR) 11-07-24 17:00:51 (0502) 5 NNNN