Once the water companies were privatised, they took out massive loans and performed no maintenance. The loans were purely to pay shareholder dividends. Now they're loaded down with debt.
Atop this, that crumbling infrastructure can't handle the increased water flow that's due to rainfall increases. So there's been a general trend of dumping raw sewage into rivers (the fines are cheaper op ex than the capex needed to fix the situation).
I don’t defend the decision; but when it was enacted it did work; in exactly and only that specific circumstance, for an exceptionally short period of time. It offloaded a comparatively small bill to the private sector, in exchange for the monopolies; a terrible idea IMHO.
I liken it to a house move. If I must pay removal people, I can either pay them what they ask, or burn everything I own and save on the price of the movers. Burning everything might save me money during moving week, but after that one initial saving, I will be paying ungodly amounts to repurchase everything I burned.
Ofwat dismissed this plan, prompting shareholders at Thames' parent company, Kemble Water, to withdraw a proposed cash injection and default on debt interest payments.
Thames has now proposed spending an extra £1.1bn on top of its original plans on "projects benefiting the environment", although it did not give details of what these would be.
It is thought that a final decision from Ofwat will come at a crucial meeting on 23 May with a "draft determination" of what companies will be allowed to charge from next year issued on 12 June.
Thames Water chief executive, Chris Weston, said: "Our business plan focuses on our customers' priorities... we've now updated it to deliver more projects that will benefit the environment.
In last month's Oxford and Cambridge boat race, both crews were given safety advice to avoid swallowing water splashed up from the river.
The samples were taken downstream from Little Marlow Sewage Treatment Works, although Thames Water said all discharges from the site had been fully compliant with environmental law.
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