Thames Water - comment

Post the completion of the UK elections, the noise around this situation has become distinctly louder as the company warned today that its cash reserves have fallen to £1.8 billion at the end of June 2024 from £2.4 billion three months previously and that it expected to run out of cash by May 2025. The company has also taken informal soundings for new funds including from its existing shareholders which have shown there is interest in the market   

We see the timing of this statement as interesting as Ofwat is going to decide on the business plan of all the players in the sector for the 2025 – 2030 time period by Friday 12th June and this may be a strategy for forcing the regulator to grant concessions including accepting the company’s request for a 40% increase in the water bill tariffs. This is clearly going to be a test case for how “market-friendly” the new Labour government is going to be.