The future of Thames Water is hanging in the balance as the Court of Appeal considers whether a £3bn emergency loan to the beleaguered company can go ahead.
Thames Water and the majority of its lenders want to see the company, which already has a £20bn debt pile, borrow another £3bn to prevent collapse while it completes a restructure.
The court has been hearing arguments over whether the loan should be granted and is expected to make a decision early next week.
Thames Water and Ofwat, the water regulator, have argued taxpayers will suffer if the loan is not granted – but environmental campaigners say the consequences will be much worse if it is.
Here, The i Paper takes a look at how the loan could impact your taxes and bills.
The £3bn emergency loan was approved last month following a High Court battle, but Liberal Democrat MP Charlie Maynard and other campaigners launched an appeal, arguing that piling on more debt was not in the public interest.
Thames Water, which serves about a quarter of the UK’s population, is expected to run out of cash completely by mid-April if it does not receive the loan.
If it collapses, it would be temporarily nationalised.
The company has argued that being put in special administration would cost taxpayers up to £4bn.
Read Next
square NEWSRead More
Ofwat, the regulator, has not commented on the figure, but Environment Secretary Steve Reed previously said government intervention would “cost billions and take years”.
Maynard and environmental campaigners have argued that Thames Water adding to its debt pile would lead to higher bills for consumers and that a collapse into administration would present a negligible cost to the Government of as little as £66m.
In court documents seen by the BBC, the water regulator rejected these claims and insisted Thames Water would be barred from paying additional interest payments using customers’ bills.
Ofwat said it had seen “no evidence to support” the £66m figure put forward by Maynard.
Current and former Thames Water employees could also see their pensions impacted if the loan is not agreed.
The trustees for the Thames Water pension scheme expressed concern that their 12,000 members “could be significantly and detrimentally impacted” should the company enter administration.
If the company collapsed, those members would probably be transferred to a lifeboat Pension Protection Fund, which provides lower future benefits than those promised by the original scheme.
How will water bills be affected if the loan goes ahead?
Maynard is leading the appeal on behalf of more than 25 MPs, 34 charities and a number of Thames Water customers.
The environmental groups trying to block the loan include Windrush Against Sewage Pollution, the Rivers Trust, the Angling Trust and We Own It.
The group argues the debt package, which comes with £1bn in interest payments and financial adviser fees, is not in the public interest.
William Day, the lawyer representing Maynard, said the cost of special administration would be cheaper – at less than half the costs of the bail-out loan that has been approved.
Campaigners said the approved restructuring plan is a “poor, short-term fix” that “aggravates rather than mitigates the Thames Water doom loop”.
square NEWS ExclusiveRevealed: Water industry's attempts to influence Labour MPs amid sewage anger
Read More
The loan carries a 9.75 per cent annual interest rate and will cost £898m over six months in consultancy fees and interest payments. This includes £210m Thames Water has paid financial advisers to come up with the bail-out plan.
Mr Justice Leech, the High Court judge who previously approved the loan, called the costs “eye-watering” and “deeply uncomfortable”.
Day told The Guardian Thames Water had offered no evidence the emergency debt package would help it raise billions of pounds of additional equity to repair its finances.
The water regulator has already given Thames Water permission to raise water bills by 35 per cent over the next five years, but the company is taking legal action in an attempt to levy a larger increase of 53 per cent.
The firm said higher bills are needed to provide “safe and resilient” water supplies that could cope with the impact of climate change.
Separately, Thames Water is under investigation by Ofwat after the firm admitted it would not complete more than 100 environmental schemes paid for by customers.
Thames Water says its restructuring plan “does not financially impact taxpayers across the UK or our customers” and will allow it to invest in its network.
Thames Water has been approached for comment.
Read More Details
Finally We wish PressBee provided you with enough information of ( What Thames Water’s proposed bail-out could mean for your bills )
Also on site :
- Nazi symbols prevalent in Ukrainian military – Le Monde
- Israel threatens to kill Iran’s supreme leader after missile strikes
- The Solstice Shift: Your Zodiac Sign’s Summer Destiny