Thames Water boss defends bonuses and repeats calls for steep bills hikes
Chris Weston’s comments come ahead of a crunch Ofwat decision next week on whether Thames Water can increase consumer bills by 59%.
Thames Water’s chief executive has defended bosses getting £770,000 in bonuses despite regulators saying it was not justified, as he called for steep hikes to consumer bills to be approved next week.
Chris Weston said: “We need to attract talent to this company… If we don’t offer competitive packages, people will not come and work at Thames.”
“I completely understand that there are customers out there who struggle with their bills,” he added, pointing to bills support offered to about 377,000 customers in the last year.
Heavily indebted Thames Water is England’s biggest water company, with about 16 million customers.
Mr Weston took on the job in January and was awarded a £195,000 bonus for his first three months at the firm.
Regulator Ofwat revealed in November that Thames Water was planning to use customer cash to pay the bonuses, but ruled that it was not “justified”.
Thames Water is in about £16 billion of debt, and is trying to secure another £3 billion to keep it running beyond mid-next year.
It faces a crunch decision from regulators next week, as they decide whether to allow a proposed 59% increase in bills over the next five years versus current levels.
Bosses have argued they need the extra money to make Thames Water “investible” enough to attract the funding, and to pay for improvements to its network of pipes and sewers.
On Tuesday, Mr Weston said regulator Ofwat “must recognise” the fundraising when it makes its final decision on December 19.
He said: “We need a regulatory settlement that recognises the reality and individuality of our business.”
The company said on Tuesday that without the emergency cash, expected to be in place by the end of January, it would run out of money in March, which is sooner than a previous estimate of late May.
The demand came as the heavily indebted water company reported a 40% rise in sewage pollution to 359 incidents in the six months to September.
Mr Weston blamed a particularly wet spring and summer period, and said that problems with Thames Water’s infrastructure were “decades in the making”.
“The infrastructure was designed to operate in the way that it operates.
“It is going to require decades to fix it, to change the way that it operates, and a significant amount of money.”
Meanwhile, Thames Water also revealed that it paid up to £51 million in fees to advisors over the six-month period as it sought to secure the emergency funding package.
Chief financial officer Al Cochran said the “majority” of a £40 million and £11 million “exceptional items” on its balance sheet were payments to consultants and advisors.
Thames Water has been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses at the UK’s privatised water firms.
The company is also the subject of bids by several investment groups who are looking to buy the company out.
Those include an offer from investment group Covalis, which could see the company broken up then re-listed on the stock market.
Another bid came from Castle Water, a firm founded by former investment banker John Reynolds and co-owned by Conservative Party treasurer Graham Edwards, was set to make an offer.
Castle Water is understood to be proposing to pump in around £4 billion into Thames Water in return for a majority stake.
Mr Weston said on Tuesday that he was “comfortable” with the number of bids received, but declined to say if any others had been submitted.
The process for an equity injection cannot be finalised until regulator Ofwat makes a final decision on planned bill hikes on December 19.
