Thames Water confirmed it is running out of money

Thames Water, the water utility responsible for London’s water supply and sewerage, has warned it may run out of cash by May 2025.

The struggling company is not alone in its financial difficulties, but as the capital’s water company it is the highest profile, and, amidst a change in government it is very much in the spotlight this week.

Today’s cash warning highlights a potential need for financial intervention – either through private or public means.

The company stated it currently has £1.8 billion available but faces a £15.2 billion debt.

Despite its challenges, Thames Water paid £158.3 million in dividends to shareholders this year.

Later this week, the British water regulator Ofwat is due to mandate the next round of price determinations for the UK, with the industry calling for a substantial hike to support essential investments in maintenance and infrastructure.

In Thames Water’s financial results for the year ending March 31, the company showed a 10% increase in revenues to £2.4 billion due to higher water and wastewater service charges. Profits rose by 21%, driven by cost management and revenue growth.

The company plans to start formal equity raising efforts in autumn 2024, with expectations to conclude by early 2025.

Meanwhile, Ofwat, the water industry regulator, is set to review Thames Water's business plan, which could impact future funding and operations.

The potential for government intervention to renationalise the company has been speculated.