iRobot
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Post by iRobot on Mar 28, 2024 17:29:00 GMT
Thames water shareholders saying they won't let the company invest in fixing issues unless the company can raise bills. Lets get this right shareholders have been getting dividends etc for years whilst the company underinvested to pay those dividends, now they want the customer to pay, presumably so they can keep on raking in the dividends. www.bbc.co.uk/news/business-68682198can you see this happening in another business KeithCo makes computer chips, and doesn't upgrade equipment then when it is forced to as the machinery won't make the latest models says we need to increase cost to customer, investing in your business is as important as paying dividends. Its a regulated industry, for what is a natural monopoly. So ultimately the fact they have been able to do what they have been doing is a complete failure of the regulatory framework/regulator. When I read the article this morning, I noted they are also insisting on a special 'reduced level' fine framework for when they are in breach. You couldn't make this **** up. The regulatory framework has clearly been too easy/loose allowing for private equity debt heavy buyouts from which they can rake off massive dividends over the years until they find they can't actually pay off their debt anymore. Thames Water - or, more accurately, its' parent company - is in a death spiral. (Puns involving 'up sh!t creek' and 'circling the drain' have been carefully avoided  ) Seemingly, as at October 2022, " external shareholders have not been paid a dividend for the last five years. The only dividends paid during that period have been to fund interest payments on debt and other group related costs".
It reportedly has £2.9B in cash (or equivalent) reserves but with the Group shouldering £16B in debt and operational costs running at £1B per year, that's not much of a safety blanket.
So it now finds itself in a 'rock / hard place' situation where it can't formulate an acceptable strategy that balances the demands of both Ofwat and investors.
It'll take some time to unwind (especially given the sensitivities of a General Election on the not too distant horizon) but I wouldn't be surprised to see TW in its' current guise broken up (whether by choice or otherwise; 'did it jump or was it pushed?') and the resultant smaller entities to be auctioned off. This would give existing investors the opportunity to form new funding partnerships and protect their existing holdings (to some degree) and/or for other infrastructure players to bring some semblance of order to the chaos - Seven Trent and/or Pennon Group might be interested, CMA considerations allowing.
A couple of crumbs of comfort:
1) Service (such as it is) will be protected
2) Any intervention by the state should be financially covered; eg: "Protection of government funding and taxpayer money: Any grants, loans and repayments in respect of guarantees provided by the Government rank ahead of the ordinary expenses of the special administration"
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benaj
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Post by benaj on Mar 28, 2024 20:06:52 GMT
Rise in pension contribution for academics or bill rise for water customers? 🤔
It seems one of the major TW investors is lucky to enough not to put more money in their investment mistake.
But what’s the actual value of the fund in March 2024?
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michaelc
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Post by michaelc on Mar 28, 2024 20:23:20 GMT
Its a regulated industry, for what is a natural monopoly. So ultimately the fact they have been able to do what they have been doing is a complete failure of the regulatory framework/regulator. I would say its a complete failure of the environment in which it operates. The idea originally of privatisation generally worked well in some sectors and not in others. Usually due to the lack of competition. In the case of water, having a heavy handed and/or unpredictable regulator is in my view just as artificial as having it publicly owned. The answer is clearly to not allow any private company to print money selling water. It needs to be publicly owned. The only artificial element should be around incentives to ensure the new public "water boards" are run efficiently - always difficult in large organisations whether public or private.
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Post by bracknellboy on Mar 28, 2024 20:51:14 GMT
Its a regulated industry, for what is a natural monopoly. So ultimately the fact they have been able to do what they have been doing is a complete failure of the regulatory framework/regulator. I would say its a complete failure of the environment in which it operates. The idea originally of privatisation generally worked well in some sectors and not in others. Usually due to the lack of competition. In the case of water, having a heavy handed and/or unpredictable regulator is in my view just as artificial as having it publicly owned. The answer is clearly to not allow any private company to print money selling water. It needs to be publicly owned. The only artificial element should be around incentives to ensure the new public "water boards" are run efficiently - always difficult in large organisations whether public or private. Public ownership is no more a panacea than private ownership need necessarily be a disaster. Some may have short memories, or simply not have been old enough to remember, but public ownership of the water utilities in the UK is a model that was already proven to have got to a point of failure, and hence the push to privatisation. There was woeful underinvestment in water infrastructure and big operating inefficiencies. As there almost inevitably is when any industry remains in public ownership for significant periods. Politicians are loathe to raise taxes to pay for investment, or raise prices, and workers and managers can hold politicians to ransom with regard to jobs and wages. Privatisation under a strong operating framework did provide significant benefits in terms of investment in the industry. Investment that was badly needed after decades of neglect. At least that is generally the mantra. And I think it was true. The problem - IMHO - has been that we have now had a fair period where we've gone backwards in some areas and at best failed to move forward in others (e.g. leaks).
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michaelc
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Post by michaelc on Mar 28, 2024 20:58:58 GMT
I would say its a complete failure of the environment in which it operates. The idea originally of privatisation generally worked well in some sectors and not in others. Usually due to the lack of competition. In the case of water, having a heavy handed and/or unpredictable regulator is in my view just as artificial as having it publicly owned. The answer is clearly to not allow any private company to print money selling water. It needs to be publicly owned. The only artificial element should be around incentives to ensure the new public "water boards" are run efficiently - always difficult in large organisations whether public or private. Public ownership is no more a panacea than private ownership need necessarily be a disaster. Some may have short memories, or simply not have been old enough to remember, but public ownership of the water utilities in the UK is a model that was already proven to have got to a point of failure, and hence the push to privatisation. There was woeful underinvestment in water infrastructure and big operating inefficiencies. As there almost inevitably is when any industry remains in public ownership for significant periods. Politicians are loathe to raise taxes to pay for investment, or raise prices, and workers and managers can hold politicians to ransom with regard to jobs and wages. Privatisation under a strong operating framework did provide significant benefits in terms of investment in the industry. Investment that was badly needed after decades of neglect. At least that is generally the mantra. And I think it was true. The problem - IMHO - has been that we have now had a fair period where we've gone backwards in some areas and at best failed to move forward in others (e.g. leaks). Why should one company be allowed to sell water and not another? There is also a decision to be made about which service is run privately. Why not privatise the armed forces ? How about let the Judiciary be run by Tescos? Schools seems like an obvious one as you could get competition there. Same for health.
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keitha
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Post by keitha on Mar 28, 2024 22:30:30 GMT
also why can't customers choose water supplier like gas and electric
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benaj
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Post by benaj on Mar 29, 2024 9:35:42 GMT
What annoyed me today is TW can't take my meter reading today, and that's no other way to submit reading apart from phoning.  Perhaps it just "me" again in a strange household scenario.
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benaj
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Post by benaj on Mar 29, 2024 9:37:46 GMT
also why can't customers choose water supplier like gas and electric May be there is a way to swtich metering company for taking payment for water usage, not the water supply in a sense. Heating network customers can't switch suppliers, but they can change metering company when there is a consensus in the network for change.
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Post by captainconfident on Mar 29, 2024 12:11:25 GMT
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Post by mostlywrong on Mar 29, 2024 12:14:52 GMT
also why can't customers choose water supplier like gas and electric I think the argument against consumer choice was that water and sewerage services were all local and best kept local.
IIRC there are still local water companies: Bournemouth, Bristol, Mid-Kent and others?
Whereas, the provision of leccy, gas and phone lines had all been combined into national services.
Or something like that!
MW
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adrianc
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Post by adrianc on Mar 29, 2024 12:21:48 GMT
£5m for a knighthood's expensive, compared to the £50k for a peerage under Trussticle.
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james100
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Post by james100 on Mar 29, 2024 12:28:57 GMT
An incredibly stupid move on his part given point in the election cycle (and very recent Diane Abbott controversy). Makes me think it must be tied to promise of additional £££ to boost election prospects - nothing else makes sense to me. This stuff always reminds me a bit of school with some people who really, really cared about getting a Prefect badge - hilarious. Edit: I do acknowledge it's also sad for those who legitimately deserve (and have already received) similar accolades / public recognition.
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keitha
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Post by keitha on Mar 29, 2024 13:17:21 GMT
An incredibly stupid move on his part given point in the election cycle (and very recent Diane Abbott controversy). Makes me think it must be tied to promise of additional £££ to boost election prospects - nothing else makes sense to me. This stuff always reminds me a bit of school with some people who really, really cared about getting a Prefect badge - hilarious. Edit: I do acknowledge it's also sad for those who legitimately deserve (and have already received) similar accolades / public recognition. Diane Abbott or Angela Rayner
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Post by bracknellboy on Mar 29, 2024 13:46:19 GMT
An incredibly stupid move on his part given point in the election cycle (and very recent Diane Abbott controversy). Makes me think it must be tied to promise of additional £££ to boost election prospects - nothing else makes sense to me. This stuff always reminds me a bit of school with some people who really, really cared about getting a Prefect badge - hilarious. Edit: I do acknowledge it's also sad for those who legitimately deserve (and have already received) similar accolades / public recognition. talking of debasing the honours system. I see that Jeffrey Donaldson ( leader of the DUP) has been charged with historical sex offences. Of course I should have said Sir Jeffrey Donaldson, since he was knighted in 2016 for services to politics. Which given when he was in the UUP he was a long standing opponent of the Good Friday Agreement, and of the leadership of David Trimble, itself would seem a travesty. Regardless of current charges. Perhaps the knighthood was for political services rather than services to politics me thinks.
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michaelc
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Post by michaelc on Mar 29, 2024 14:16:32 GMT
also why can't customers choose water supplier like gas and electric That would be ideal but how would it work? Who would own and maintain the pipes and why would they have an incentive to fix them for the long term if they were not selling water down them. Or would do what seems to be happening in my area and have the roads dug up multiple times for multiples copies of pipes/cables ? If you did that, you'd also hav more infrastructure in total to maintain so we'd look forward to the road being dug up even more. All that aside from the fact that having 5 pipes all capable of delivering water to the house seems daft.
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) 
Perhaps it just "me" again in a strange household scenario.
