Photo: Thames Water Beckton STW
Thames Water has announced that its Chief Executive Officer David Owens is to stand down after only three years at the top. The news, coming just four days after the Final Determination was announced combined with the fact that Mr Owens does not apparently have a job to go to suggests there is a link. Thames Water was hit hard in the final determination with Ofwat’s decision to allow prices rises of just 3% on average compared to 17% in Thames Water’s Final Business Plan (FBP).
The gap between the FBP and Ofwat’s view is even larger for some of the water only companies. Bristol Water had asked for price rises of 29% and were granted 7% while Sutton and East Surrey had asked for 27% and got 1% . Some such as United Utilities have actually got a decline in prices over the five year period of 3%.
This mismatch between ask and actuals is not healthy. It does imply that the water companies failed to understand the political reality in which they operate. At a time of recession a price increase of over 25% was never likely to be realistic. It also implies that either the water companies misread Ofwat or that they failed to present a well argued case. Its vital for the health of the water industry that the evident gap between the water companies and Ofwat is closed. Expect more fall out at the top of the water companies in the coming weeks.
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