plan for collapse of Thames Water

[danlightbulb]

The very cynical among us might presume that the idea is to reduce consumption while ensuring the sector remains financially viable. In other words, we want you to use less but pay more – rest assured, we'll try to make this less noticeable through seasonal pricing and thresholds.

It's for misguided environmental policies. Growth means that demand for water is increasing so rather than build more reservoirs or take more water from the environment, some parties think it's better to make people cut their usage.

This responsibility gets put onto water companies, who actually don't have much influence over what people do, and companies get lumbered with these unrealistic targets and penalties if they are not met. Hence why these tariffs trails are going on.

These reductions in usage aren't really reducing companies operating costs because it's offset by growth, and new assets and maintenance are still needed, so it's not a revenue/finance thing at all. In fact it's costing money to install all the meters and run these trials. To some degree it could ultimately slow down the need for new assets a little, which ultimately means customer bills don't rise as much in the long term. But as water is seen as a universal service that falls from the sky, some people get uppity when they can't have unlimited use of it hence the backlash.

By the way it's the EA that has been imposing licence cuts on companies abstraction sites, piling pressure on available water resources. That doesn't get mentioned.

 

[darkgen]

It's for misguided environmental policies. Growth means that demand for water is increasing so rather than build more reservoirs or take more water from the environment, some parties think it's better to make people cut their usage.

This responsibility gets put onto water companies, who actually don't have much influence over what people do, and companies get lumbered with these unrealistic targets and penalties if they are not met. Hence why these tariffs trails are going on.

These reductions in usage aren't really reducing companies operating costs because it's offset by growth, and new assets and maintenance are still needed, so it's not a revenue/finance thing at all. In fact it's costing money to install all the meters and run these trials. To some degree it could ultimately slow down the need for new assets a little, which ultimately means customer bills don't rise as much in the long term. But as water is seen as a universal service that falls from the sky, some people get uppity when they can't have unlimited use of it hence the backlash.

By the way it's the EA that has been imposing licence cuts on companies abstraction sites, piling pressure on available water resources. That doesn't get mentioned.

Metering should be sufficient, with universal costs throughout the year. You use more, you pay more; that's fair. Opting to charge more based on the season with additional thresholds or bands seems like an attempt to obscure the real intention of increasing bills, all while claiming fairness for everyone.

I completely agree regarding the regulators. They are all competing with and contradicting one another, which is a complete mess. It’s something you would think could be politically addressed through consolidation and the implementation of a unified water resource strategy.

 

[ttaskmaster]

Shareholder stakes are already worthless. This is on KKR and the gov really.

How is it on KKR? Shareholders refused one of the requirements for investment, so KKR cannot invest...

 

[200sols]

How is it on KKR? Shareholders refused one of the requirements for investment, so KKR cannot invest...

Will you providing a source for that information? The existing shareholders already wrote down their investments to 0 as I said. They are talking to the bond holders/creditors now.

 

[ttaskmaster]

Will you providing a source for that information? The existing shareholders already wrote down their investments to 0 as I said. They are talking to the bond holders/creditors now.

Only one shareholder wrote their stake off. That's only a 30% stake. The others did not follow suit.
They won't be talking to bondholders as their return is fixed.
The withdrawal also coincides with the Cunliffe Review, which highlights further conditions that may proclaim a company as less investable. It depends what picture KKR were given, but I wouldn't say the current problem is their fault for not investing in an unfavourable prospect.

 

[200sols]

Only one shareholder wrote their stake off. That's only a 30% stake. The others did not follow suit.
They won't be talking to bondholders as their return is fixed.
The withdrawal also coincides with the Cunliffe Review, which highlights further conditions that may proclaim a company as less investable. It depends what picture KKR were given, but I wouldn't say the current problem is their fault for not investing in an unfavourable prospect.

No source then. You are stating as fact what is just your opinion here.

They will be talking to everyone including bond holders and creditors as the deal involved writing off some £8bn of existing debt.

The plan includes a full write-off of £3bn in Class B bonds and shareholder loans, as well as holding company debt. Senior creditors may also face losses of around £5bn. The restructuring aims to significantly reduce Thames Water’s nearly £20bn debt load and restore financial stability.

They are now talking again to the next lot in line, again including creditors and bondholders.

Other potential investors, including hedge funds Silver Point Capital and Elliott Management, are also conducting due diligence. A creditor-led proposal backed by senior Class A bondholders is expected in parallel.

No mention of the shareholders although I expect they are consulted as they use the term 'stakeholders' which includes everyone.

Thames Water is teetering under a mountain of debt of nearly £20bn. To avoid temporary renationalisation under the government’s special administration regime (SAR), it secured an expensive emergency loan of £3bn from creditors including US hedge funds Silver Point Capital and Elliott Management. In parallel, it sought new equity from investors after its previous shareholders wrote down their stakes to zero last year. Thames Water selected KKR as its preferred bidder in March.

Looks like political risk played a big part.

No more blood to be squeezed from this stone for these PE vampires.

 

[ttaskmaster]

No source then. You are stating as fact what is just your opinion here.

The only shareholder confirmed to have written off it's investment was the Canadian OMERS pension fund.

They will be talking to everyone including bond holders and creditors as the deal involved writing off some £8bn of existing debt.

KKR's proposal demanded that write-off.
It does not appear to have actually happened, though... and it was previously stated that KKR's bid was contingent upon those shareholders doing this.

Looks like political risk played a big part.

I wouldn't know, as I'd have to invest money to read that article... unless you want to post the content?
But yes, as I said, the Cunliffe Review could have changed the political outlook and thus the investability of the industry. This was even predicted in earlier articles.

No more blood to be squeezed from this stone for these PE vampires.

If all shareholders had written off their debt, that would make it a fresh corpse ripe for harvesting...

 

[danlightbulb]

Metering should be sufficient, with universal costs throughout the year. You use more, you pay more; that's fair. Opting to charge more based on the season with additional thresholds or bands seems like an attempt to obscure the real intention of increasing bills, all while claiming fairness for everyone.

The problem is that water is still cheap enough that it doesn't disincentivise excessive use, even on a meter. Increasing the cost across the board would leave a high proportion of people paying more for essential use, which would effect certain groups very negatively (example family on low wages who might struggle to pay even though their usage is low).

So one of the potential solutions is to increase costs for those who can afford it, whilst keeping the baseline use level relatively cheap. This is where ideas like rising block tariffs come in. They protect the less wealthy from excessive bill rises by loading the disincentive for excessive use onto those very high users.

Its not a bad idea in principle. The issue is that to be effective the thresholds can't be stupidly high - they need to be low enough to protect essential use but encourage people to change behaviours for anything above that. Very tricky balance to find, and people won't like it, as has been demonstrated.

Its really nothing to do with revenue - industry operates on a fixed revenue model, believe it or not any increased revenue as a result of these schemes doesn't go towards company profits. Its purpose is solely to meet the government water efficiency targets and to help companies drop demand to meet licence constraints that are being imposed.

 

[darkgen]

The problem is that water is still cheap enough that it doesn't disincentivise excessive use, even on a meter. Increasing the cost across the board would leave a high proportion of people paying more for essential use, which would effect certain groups very negatively (example family on low wages who might struggle to pay even though their usage is low).

So one of the potential solutions is to increase costs for those who can afford it, whilst keeping the baseline use level relatively cheap. This is where ideas like rising block tariffs come in. They protect the less wealthy from excessive bill rises by loading the disincentive for excessive use onto those very high users.

Its not a bad idea in principle. The issue is that to be effective the thresholds can't be stupidly high - they need to be low enough to protect essential use but encourage people to change behaviours for anything above that. Very tricky balance to find, and people won't like it, as has been demonstrated.

Its really nothing to do with revenue - industry operates on a fixed revenue model, believe it or not any increased revenue as a result of these schemes doesn't go towards company profits. Its purpose is solely to meet the government water efficiency targets and to help companies drop demand to meet licence constraints that are being imposed.

I do get that. I just wish there was more honesty when introducing these new pricing models. I can't help but be highly cynical that once introduced, the additional complexity will prompt these private companies to be creative in adjusting their service models in ways that allow for more innovative methods of increasing bills, regardless of whether consumers are low, middle, or even high.

 

[danlightbulb]

I do get that. I just wish there was more honesty when introducing these new pricing models. I can't help but be highly cynical that once introduced, the additional complexity will prompt these private companies to be creative in adjusting their service models in ways that allow for more innovative methods of increasing bills, regardless of whether consumers are low, middle, or even high.

Yeah understood - the water sector regulatory model is quite counter intuitive. Its fixed revenue, so any additional revenue a company earns from increased bills in-period gets trued up and returned back in a subsequent year.

So for example if we get a hot summer and customers on a meter use more water, paying more in their bills, the company doesn't keep that money - it gets spread back over the customer base in a subsequent year. The same happens in reverse if revenue is down, its topped up in a subsequent year. Most people won't be aware of this, which is why some think that water companies getting customers to cut usage is odd because its like them saying they want to sell less of their product which doesn't make sense to them. The reality is it that variation in usage gets adjusted for later so there is no benefit or disbenefit to the company.

 

[bigmike20vt]

i dont have a problem with water meters..... i wouldnt have a problem with a set "cheap" amount of water allowed per household then an increasing cost going over that amount, to encourage people to think about water.
the waste i see by some people does blow my mind (washing dishes with the tap just running into the sink without the plug in for one obvious example).

however until people actually take some responsibility themselves even when it does not directly affect their bottom line i do not see a solution, I worry its kind of rearranging the deck chairs on the sinking titanic.... The amount of times i have to turn taps off in pubs or at work due to someone just leaving it on (often not helped by faulty taps which are meant to shut off but dont properly)

and even now i still regularly see bursts which take days to put right. there is one on our main road now, its been there for days. The gas board are just down the road replacing all the gas pipes and they have definitely seen it and they should know who to report it to.

so long as people dont care then i see it only getting worse.

All that said......... i am no angel either...... its June now so i expect i will be filling the paddling pool soon for the next few months and that will likely waste 2500l of water at least (it will go in water butts however once done, or will at least if we dont have much rain)

as a species we are buggered imo as we - and i include myself - do not help ourselves.

 

[Kenai]

and even now i still regularly see bursts which take days to put right. there is one on our main road now, its been there for days. The gas board are just down the road replacing all the gas pipes and they have definitely seen it and they should know who to report it to.

This is actually a fairly big problem... Everyone complains "that leak has been there for weeks" but also assume someone else will report it.

So in the end nobody reports it.

 

[Nigel Kingdon]

Metering should be sufficient, with universal costs throughout the year. You use more, you pay more; that's fair.

The water co's don't want meters installing in households with 2 or fewer people. Currently, without a meter, you are charged on number of bedrooms, as they deem that a 3 bed house has 5 occupants. The 'rate' is then calculated on 5xcomsumption and 5xwaste.
My bill went down by over £300 p/a when I switched as there's just two of us.

What is needed is a break of the monopoly. Introduce some form of completion a bit like electricity.

 

[bigmike20vt]

in my defence i did try to report but

Screenshot from 2025-06-04 15-38-31.png

drive.google.com

 

[b0rn2sk8]

The water co's don't want meters installing in households with 2 or fewer people. Currently, without a meter, you are charged on number of bedrooms, as they deem that a 3 bed house has 5 occupants. The 'rate' is then calculated on 5xcomsumption and 5xwaste.
My bill went down by over £300 p/a when I switched as there's just two of us.

Sounds like a conspiracy theory to me.

What is needed is a break of the monopoly. Introduce some form of completion a bit like electricity.

It would make zero difference, the underlying network is still a monopoly. The only difference between providers is who send you your invoice. Ironically there is a choice of providers for business, it makes no difference to the underlying price.

The competition in the retail energy market is not ‘real’ competition because like with water, the energy ultimately comes from the same place.

The only way for their to be competition in the water sector is for There to be competing infrastructure. It makes zero sense to have two plus entirely separate water networks serving the same property.

 

[ttaskmaster]

The water co's don't want meters installing in households with 2 or fewer people.

They do, as it enables accurate monitoring and reporting.

The only way for their to be competition in the water sector is for There to be competing infrastructure.

Public ownership, private operation. Companies then compete on who can offer the best standard-meeting service for the lowest price.
What you don't want is a return to having several thousand companies and subbies all vying for small patches of supply area. That was already proven to be disastrous.

 

[b0rn2sk8]

That’s not competition though is it, certainly not for the consumer?

Its just an outsourcing operation, not dissimilar to how trains were operated and is now being dismantled.

My water meter is now ‘smart’, it phones home every 30 mins. Not sure a competitive tender for this really adds any value.

National standard and metering operation which enables seamless join up across the whole country would be more sensible.

 

[bigmike20vt]

it is probably me being paranoid... and i need a few more months of data but my water bill seems to have shot up significantly since getting a new smart water meter. I was already on a water meter so its not like i was on rates or anything before.
I was worried i had a leak however after going on holiday for nearly a week i was able to rule that out as our usage dropped to a tiny trickle when we were away (which i assume was our water softener)

 

[danlightbulb]

The water co's don't want meters installing in households with 2 or fewer people. Currently, without a meter, you are charged on number of bedrooms, as they deem that a 3 bed house has 5 occupants. The 'rate' is then calculated on 5xcomsumption and 5xwaste.
My bill went down by over £300 p/a when I switched as there's just two of us.

Not true. Makes no difference to water company revenue that your bill went down. The regulatory model is fixed revenue, so your drop in bill eventually gets spread over everyone else so the company recovers the same amount in totality. Same thing happens in reverse so company can never make more revenue than allowed either.

This is what many don't understand when they say its a monopoly with no risk - there is risk such as this one, volume risk, that customers will use more water than predicted and company can't benefit from the extra revenue but does incur the additional production costs.

 

[ttaskmaster]

That’s not competition though is it, certainly not for the consumer?

It limits the profit they can generate for shareholders, and because they don't have the monopoly or asset ownership they can be replaced pretty much at the drop of a hat, if they don't meet performance targets or keep bills sufficiently low.

Its just an outsourcing operation, not dissimilar to how trains were operated and is now being dismantled.

And how many successful bus services still operate...

My water meter is now ‘smart’, it phones home every 30 mins. Not sure a competitive tender for this really adds any value.

And what about all that network stuff that connects to your house? You know, the water supply and sewerage...

National standard and metering operation which enables seamless join up across the whole country would be more sensible.

It would seem fair, but again you'd have low volume users subsidising the cost of large area infrastructure like they did with the Tideway and Lee Tunnels for zero personal return.
You'd also have too many other competing factors in cutting costs from other areas to meet National Standard, particularly in an industry where the operational assets are anything but standard. That sort of thinking leads to stupid decisions like pitch-fibre pipes.