plan for collapse of Thames Water
- Thread starter Mrwong
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Caporegime
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Anglian, South East Water and Southern also appealing determinations.
The deadline is today so might be some more coming throughout the day.
Company announcements:
Southern Water Appeals Ofwat Final Determination
www.southernwater.co.uk
Decision by Board requesting Ofwat to refer its PR24 Final Determination to the Competition and Markets Authority (CMA) | Anglian Water Services
Anglian Water’s Board has asked Ofwat to refer its PR24 Final Determination to the Competition and Markets Authority (CMA).www.anglianwater.co.uk
This is just emblematic of how facilities companies are consistently trying to **** us over. Energy companies are using the "energy price cap" as a marketing tool FFS, something that shouldn't exist in the first place. Same with these water companies, they literally have to be told to wind their necks in.
It's ridiculous, something is very seriously wrong with the management of these companies if they need to be told to stop stiffing the public. What happened to pride? Trying to run a company because it's a vital service to those it serves? Instead it's all just shameless profit profit profit and screw the people they are meant to be serving.
Something is very broken in this country and it's going to take one hell of a mindset change to fix it.
I think you fundamentally misunderstand what the key objective is of the management of these companies.
These are private companies, they have a literal legal obligation to maximise the wealth of their shareholders. It’s literally their job to make as much profit as legally possible so they can return it to their shareholders in the form of increased share prices and dividends.
That means extracting every single penny they possibly can from their customers and spending as little as possible to deliver the service required.
The issue here is that they are not delivering the service required, extracting the money, and then once everything goes wrong they run knowing the client is too weak to get the money back.
This is another example - https://www.bbc.com/news/articles/czdllq5z6jeo
The schools have failed to hold TSSL to account, the contract will end, TSSL will disappear, and the council will have paid out to TSSL without getting any services.
Caporegime
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That's exactly the problem isn't it, they shouldn't be for profit.
Schools have zero bearing on Themes water, the whataboutism has zero relevance to this thread.
I’d also suggest that Themes would argue that for the most part, they have delivered the service.
It’s far more complex than any of you give it credit for, particularly due to regulatory scope creep and goal posts being moved constantly. Also regulatory failure and the obvious conflicts between OFWAT (low bills) and the Environment agency’s (low environmental impact) objectives and enforcement approaches. The two things are effectively mutually exclusive.
This situation is mostly understood. The question is, what can be done to improve the situation, whether to make privatisation work in a more ethical way as a key infrastructure service provider or perhaps go full tilt in to left field?
What would you propose? What are your thoughts?
Soldato
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Is there some way we could let customers switch like we do for energy? Then joke companies get punished.
If not, I think public ownership is the only way. A private monopoly is always bad times for consumers.
If not, I think public ownership is the only way. A private monopoly is always bad times for consumers.
That ship sailed 30 odd years ago when the conservatives were enthusiastically flag waved into government to yet again undertake unilateral policies which inflict harm on the long term prospects of the U.K. (like Brexit).
What we should be looking at is how to make the best of a bad situation not trying to re-write something that happened decades ago.
For a start, a clear and obvious improvement would be to bring the regulation of the water companies under a single regulator with a single set of clear, non-contradictory objectives.
You need only look at Welsh Water to see the problem goes deeper than that, if it was just because of shareholders extracting profits, Welsh should be topping every performance metric going but they're not.
Whilst shareholders taking money is a problem, fundamentally water is too cheap and we're trying to drive standards that are 'champagne taste' with a regulator that's been tasked with making sure bills only allow charging for 'beer money'.
If we want to be spending fortunes on upgrading treatment works effluent to have (as an example) less than 0.1mg/l of phosphorous rather than the 0.5 or 1mg/l we're currently happy with or the 2mg/l we were happy with 10 years ago, society needs to accept this stuff is going to get considerably more expensive and this will be the case whether shareholders are skimming off the top or the water companies are in public ownership.
The energy market is false competition, all you can do is move to a supplier which creams a smaller chuck off the top, it doesn’t fundamentally change the underlying market dynamics.
Business can already use a number of ‘suppliers’, but fundamentally they all still use say Themes waters infrastructure and pay all themes waters costs if they are in a themes water catchment area. The only difference is the logo at the top of the bill.
This is what I was trying to say regarding the conflicts between OFWAT and the Environment agency, just put more eloquently.
Pointless exercise that just adds a middle man to process your bills and charge you for it.
The water would still cost the same, still come from the same providers etc. you just wouldn't deal directly with them.
In theory, you could get some price aggregating across the country where cheaper areas subsidise the costs of more expensive areas if you did that but not sure that would be enough benefit to offset the extra money being skimmed off the middle.
Soldato
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The retail (customer service, billing, meter reading) element of the bill is so small it wouldn't make a lot of difference. You'd be billed by someone else and phone up another call centre if there is an issue, but the underlying service would still be the same infrastructure and that's where most of the bill comes from including most of the returns.
Its interesting idea but one which is likely to see bills rise because Ofwat actually does a lot to tame the whims of the EA.
Im not sure giving economic power to the EA would see them try and reign themselves in in terms of frivolous environmental spending.
Caporegime
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I saw this play out very well when I worked at BTFS. You had the workforce with this government institution mentality working for a private company. The management were all after maximum profits and the workforce were generally all unioned up and knew exactly how to put in the minimum amount of work to get paid. Not all of them obviously, but quite a few. As a result the salaries also remained low so generally you'd have the less productive people joining the company and the circle would simply perpetuate itself. I then went to work for JP Morgan which was a very, very different mindset. Everyone there was well paid, knew what they were there for and any slackers were dealt with.
I suspect that Thames is very much in that grey area of public mentality but private profits. It'll take an entire mindset change to repair it.
Energy is another interesting interlink to water too that i'm not sure people necessarily understand - as standards have changed, so too have the methods for treating sewage (water not so much) and the technologies required are more and more energy intensive than ever - hundreds upon hundreds (or even thousands at bigger places) of kW of pumps, blowers, aerators etc. all running 24/7.
As a result, when energy prices go through the roof, a much much bigger element of operational costs now go up for the water companies than even 10 years ago. (it wouldn't surprise me if electricity is now the biggest operational cost for a lot of places)
Long gone are the days when treating sewage to an acceptable standard was possible with a screen, a few settlement tanks and some trickling filters.
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Soldato
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Sounds good to me - Then I won't have to do any work!!
Soldato
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Gravy train if it happens. At least it will be for workers not shareholders. Union membership would rise quickly.
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What OFWAT has done regarding bills and limited investment is a huge contributor to the problem.
On the one hand you have DEFRA and the Environment agency (England) requiring more monitoring and higher standards via environmental regulations.
On the other hand you have OFWAT who actively prevent water companies from investing to improve infrastructure to meet the new standards because it comes at a cost.
Every year the water companies come along and say we need to invest X to maintain the infrastructure and Y to make improvements to meet the standard. OFWAT says they can have Z but Z is usually considerably below X plus Y.
Water in the U.K. is incredibly cheap but that’s because are sewage systems are done on the cheap and essentially leads to a lot of sewage being discharged or not treated to a high standard. Water companies can’t fix the latter even if they wanted to because OFWAT actively prevents them from raising the money to do so.
The longer this can gets kicked, the more expensive it gets to fix the problem. It’s been getting kicked for decades at this point.