By William MacNamara
Published: December 1 2009 02:00 | Last updated: December 1 2009 02:00
David Owens, chief executive of Thames Water, resigned yesterday, less than a week after the water regulator delivered a verdict on five-year pricing that appeared unwelcome to the country's biggest, London-centred, water company.
Thames, privately owned by a Macquarie-led consortium of investors, said in a statement that Mr Owens decided to step down after reaching the "important milestone of receiving Ofwat's final determination".
Last week, Ofwat, regulator of the UK's privatised water sector, set prices for the next five years that were broadly flat and even marginally declining on average after inflation. While the ruling, good news for water bill payers, was not as bad for water companies as many of them suspected, it still put pressure on them to work to the same standards on lower profits and manage the debt load they took on during years of easy credit for utility companies.
Thames had asked for a 3.4 per cent average annual rise in water and sewerage pricing to 2015. But Ofwat decided it would only get a 1.4 per cent rise. Coupled with the regulator's decision to assume a cost of capital for the water companies of 4.5 per cent, this puts Thames under more strain than most peers to deliver satisfactory returns to its shareholders.
Mr Owens, a member of the Macquarie team that took over Thames, liked to point out that Thames was different from other water utilities. Tasked with maintaining a leaking network of pipes hundreds of miles long and buried under busy London streets, it deserved the sort of price hikes it asked for, the company said in the lead-up to the Ofwat determination.
Even before the ruling, Thames officials were suggesting the company would appeal against Ofwat's decision to the UK's Competition Commission, an option for any water utility.
Now the decision will be made under the interim chief executive, Martin Baggs. He is a Thames board member and former managing director of South East Water.
Published: December 1 2009 02:00 | Last updated: December 1 2009 02:00
David Owens, chief executive of Thames Water, resigned yesterday, less than a week after the water regulator delivered a verdict on five-year pricing that appeared unwelcome to the country's biggest, London-centred, water company.
Thames, privately owned by a Macquarie-led consortium of investors, said in a statement that Mr Owens decided to step down after reaching the "important milestone of receiving Ofwat's final determination".
Last week, Ofwat, regulator of the UK's privatised water sector, set prices for the next five years that were broadly flat and even marginally declining on average after inflation. While the ruling, good news for water bill payers, was not as bad for water companies as many of them suspected, it still put pressure on them to work to the same standards on lower profits and manage the debt load they took on during years of easy credit for utility companies.
Thames had asked for a 3.4 per cent average annual rise in water and sewerage pricing to 2015. But Ofwat decided it would only get a 1.4 per cent rise. Coupled with the regulator's decision to assume a cost of capital for the water companies of 4.5 per cent, this puts Thames under more strain than most peers to deliver satisfactory returns to its shareholders.
Mr Owens, a member of the Macquarie team that took over Thames, liked to point out that Thames was different from other water utilities. Tasked with maintaining a leaking network of pipes hundreds of miles long and buried under busy London streets, it deserved the sort of price hikes it asked for, the company said in the lead-up to the Ofwat determination.
Even before the ruling, Thames officials were suggesting the company would appeal against Ofwat's decision to the UK's Competition Commission, an option for any water utility.
Now the decision will be made under the interim chief executive, Martin Baggs. He is a Thames board member and former managing director of South East Water.
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