KEY POINTS
- UK is facing a water shortage during increased summer heat
- Thames Water, the UK’s largest water company, is struggling to keep up with debts
- UK government is looking at nationalizing Thames Water to meet demand of customers
The demand for water has increased in the United Kingdom, and water companies have struggled to keep up, with some even implementing hosepipe bans to preserve water.
The U.K. is currently facing an early summer heatwave, and is showing temperatures up to 6°C warmer than the average this June.
A report from the Met Office, the U.K.’s national weather service, shows that this is not the end either, with the chance of unusually hot weather twice the average. Between the heat and lack of rain, British citizens are facing a water shortage. 1 in 5 reservoirs are below normal or at a notable low according to the country’s Environment Agency. The U.K.’s largest water company, Thames Water, is one part of the problem.
Thames Water was privatized three decades ago. Since then, it has built a £14 billion debt pile. This burdensome debt prevents necessary infrastructure spending in the water system that is, in some parts, 150 years old.
This outdated system prevents storing enough water and leads to leaks, wasting valuable water. There is also potential for pollution of natural water sources by way of leaking sewage pipes.
Earlier this year, Thames Water also lost their CEO, Sarah Bentley. Reportedly, part of her decision to resign came from “decades of underinvestment” that led to many of the company’s problems.
Rebecca Pow, parliamentary under-secretary of state for environmental quality and resilience, told the British Parliament’s House of Commons, “there is a lot of work going on behind the scenes with Thames Water to ensure customers are not impacted.”
The British Department for Environment, Food and Rural Affairs; Treasury, and the Water Services Regulation Authority (Ofwat), are currently in discussions to enter Thames Water into a special administration regime (SAR), using a bill passed in 2011. Placing a company into an SAR temporarily nationalizes the the company by placing it under public ownership.
This is not a new concept. The bill was used in the past, with the company Bulb in 2021.
Bulb was a private energy company placed into an SAR in November of 2021 after failing to secure funding to stay afloat. Bulb provided continuous service to its customers with the SAR providing the necessary funding until the company was bought out by Octopus Energy, and a plan was set out to pay their debts.
No decisions have been made yet, and hopes are that an SAR will not be necessary.
