Thames Water faces potential government intervention as Environment Secretary Emma Reynolds questions a proposed £10 billion creditor rescue, warning it could unduly burden the company’s 16 million customers.

Ofwat was close to accepting London & Valley Water’s bid, which would inject up to £3.35 billion in equity and as much as £6.55 billion in debt in exchange for waiving four years of new fines for sewage leaks.

Thames Water says a market-led solution remains preferable and it aims for long-term financial stability through negotiations with all parties.

The potential intervention could take the form of a temporary nationalisation under a special administration regime, with government-appointed managers keeping essential services running.

Thames Water stresses that its ongoing infrastructure upgrades are essential for safe, reliable services and environmental improvements, and it emphasizes collaboration with regulators, government, and suppliers.

The company reiterates its turnaround program and aims to deliver safe, resilient services while working with regulators and the government to secure stability for customers and stakeholders.

Key dates include Reynolds’ letter to Ofwat and her parliamentary address, with timing aligned to summer government decision-making.

Defra said Reynolds’ views do not bind Ofwat’s future decisions and that there would be no disruption to water supplies regardless of any bid.

Officials indicated reforms to the water regulator are anticipated, including a potential abolition and replacement, while continuing to engage with London & Valley Water.

Defra and Ofwat stressed Reynolds’ views do not predetermine regulatory outcomes and that customers should not face supply disruptions.

Conservative critics warn against scaring off investors, while stressing the need to keep Thames Water afloat and protect bill payers and taxpayers.

Shadow environment secretary Victoria Atkins cautions against deterring investors and emphasizes safeguarding customers and public finances.