The UK government and water regulator Ofwat are drawing up contingency plans for the potential collapse of Thames Water, Britain's largest water company, amid concerns over its massive debt burden. Discussions are underway about placing the company into a special administration regime (SAR), which would temporarily bring it into public ownership.
Thames Water, which serves millions of customers, is struggling with a £14bn debt pile and has faced criticism over high leakage rates and repeated fines for sewage discharges. The company confirmed it received £500m in new funding from shareholders in March and said it continues to maintain a strong liquidity position with £4.4bn in cash and committed funding as of 31 March.
The SAR process was last used in 2021 for energy supplier Bulb, which was eventually sold to Octopus Energy. A government spokesperson stated that preparing for various scenarios across regulated industries is standard practice, while Ofwat said it is monitoring Thames Water's financial position and pushing for a credible turnaround plan.
Labour MP Darren Jones, chair of the business and trade committee, criticised Ofwat's regulation, saying companies deemed 'too important to fail' should be regulated differently. He expressed frustration that customers and taxpayers may again bear the cost of corporate failures and poor investment decisions.
