Thames Water’s problems have been blamed on a combination of poor historical regulation, actions by shareholders, climate change and management failure.
Some have argued Thames should have been allowed to collapse and be nationalised due to it being the architect of its own misfortune. Previous owners loaded the company with debt and took out big dividends.
But others, including water companies, have argued that a growing population and the challenges of a changing climate mean bills need to be higher and were kept at lower levels for too long.
The first £1.5bn of the rescue loans to Thames Water will see the company through to the autumn.
A second instalment will be used to fund the company as it appeals a decision by Ofwat over how much Thames can raise household bills by – a process which could take up to a year.
The company was set to repay £200m worth of debt due in March, but following the court ruling, all its debt repayments have been extended by two years.
Last week, Thames launched an appeal to allow it to increase bills by more than the regulator had granted.
Ofwat has capped bill rises at 35% over the next five years, but Thames has argued they need to increase by 53%.
Five other water companies – Anglian Water, Northumbrian Water, Southern Water, and Wessex Water along with water-only company South East Water – have also said they will appeal to allow them to increase bills beyond Ofwat’s cap.
In total, the six companies serve more than half of all households in England.
David Henderson, chief executive of the trade association Water UK said the extra money is need for water infrastructure investment.
Six firms have said they will not appeal: Severn Trent, United Utilities, Pennon plus Dwr Cymru Welsh Water, SES and Hafren.
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