Thames Water: What would the nationalisation of the beleaguered supplier mean for customers?

• Words by ITV Meridian Journalist Harry Acton.

It has been reported that Thames Water could be taken back into public ownership, as the UK's largest water supplier battles to pay down a £14bn debt pile.

More than 15 million customers would be affected if Ofwat decides to place the company into a special administration regime (SAR).

If Thames Water was put into a SAR it would effectively renationalise the supplier until a buyer could be found and put liability on the taxpayer to fund its activities.

The scheme has previously been used with the energy supplier, Bulb, which went bust in 2021.

What would change for customers?

In theory, nothing. Ofwat would manage the implementation of the SAR and there would be no immediate impact for customers.

The regulator would work with any special administrator that is implemented to ensure households are protected both in the short and long term.

It's possible, if a new owner is found, that customers would transfer to a new company and bills would be payable to them.

At no point would supplies be affected, Ofwat says. Water Companies are effective monopolies which force the regulator to act to ensure customers receive a service.

Would households lose supply?

Under Government regulations water companies classed as of "strategic importance" must provide a service to customers.

The interests of customers are central to a special administration regime (SAR), which is defined in the Water Industry Act 1991.

The Act allows the secretary of state to override insolvency proceedings and allows the company to be transferred to a new owner, which would protect customers.

At no point during the SAR would supplies be cut off and customers would be kept updated with any changes of supplier.

What about investment?

Under the SAR investment in the network is not guaranteed.

Ofwat itself says there are reasons to avoid SAR, including the disruption to planning for the future and the risk of reduced investment.

The body admits in a review it publish about its processes that the SAR could cause a longer-term impact on customers.

Effectively, any previous investment announced by Thames Water would not be guaranteed under the SAR.

This could include planned upgrades to sewage treatment works and investments in replacing pipes.

What are Ofwat's responsibilities if a water company is close to collapse?

Ofwat says it is not required to prevent water companies from getting into financial distress or failing in all circumstances.

The regulator says financial distress and the failure of companies is "just part of the normal operations of markets".

An Ofwat release said: "If we were required to prevent companies failing in all circumstances, this could mean, for example, that inefficient companies were maintained to the detriment of their customers.

"We interpret our duties to mean that we only need to ensure that efficient companies are able to finance their functions, not any company."

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