Committee publication · Correspondence · 9 July 2025
Correspondence from Ofwat regarding Thames Water’s Management Retention Plan and ownership, dated 23 June 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Ofwat's response to the Environment, Food and Rural Affairs Committee regarding Thames Water's Management Retention Plan, KKR's takeover withdrawal, and the company's financial resilience. Ofwat states it received no prior notification of the MRP, was unaware of April payments until late May, and confirms Thames Water voluntarily paused the scheme. On funding, Ofwat expects continued creditor support via smaller tranches and maintains contingency planning for potential special administration.
Key findings
- Ofwat had no discussions with Thames Water on its MRP prior to the May 13 evidence session; learned of payments only after requesting information on May 16, receiving response May 30.
- MRP payments made April 30 fall outside the PRP Prohibition Rule scope as no recipients were board members; rule applies only to board-level executives, not the 21 senior managers in Thames Water's scheme.
- Thames Water voluntarily paused the MRP on May 19 pending regulator guidance under the Special Measures Act; Ofwat expressed disappointment at lack of transparency and committed to close monitoring.
- KKR's withdrawal confirmed June 2; Super Senior Creditors agreed to advance first £1.5 billion tranche in smaller monthly tranches rather than full instalment due to restructuring plan appeals.
- Ofwat anticipates continued creditor engagement and monthly funding extensions; conducts weekly calls and 13-week cashflow forecasts with Thames Water; maintains contingency planning for special administration.
Tone
FactualTopics
Key actors
David Black, Ofwat Chief Executive, Alistair Carmichael MP, EFRA Committee Chair, Sir Adrian Montague, Thames Water board representative, Thames Water, KKR, Super Senior Creditors, L.E.K. Consulting, independent monitor, Department for Environment, Food and Rural Affairs (Defra)
Notable line
“We are also disappointed at the lack of transparency that Thames Water has shown in this regard.”
Key Quotes
“Prior to the evidence session discussing this issue before the Environment, Food and Rural Affairs (EFRA) Select Committee on 13 May 2025 , Ofwat had had no discussions with Thames Water in relation to its "Management Retention Plan"”
“We are also disappointed at the lack of transparency that Thames Water has shown in this regard. At a time when remuneration in the water sector is under significant public scrutiny …”
“Based on the information that Thames Water has provided, none of the recipients of the MRP payments to date are or were members of the company's board. As a result, the payments made on 30 April 2025 are not within the scope of the rule.”
“Ofwat anticipates that the Company and Super Senior Creditors will continue to engage in this process of monthly extensions and smaller tranches of funding being advanced during negotiations in relation to the equity raise progress.”
“Ofwat has carried out, and continues to carry out, appropriate and prudent contingency planning for a potential special administration, as any regulator would in a position of uncertainty of this kind.”
Source · parliament.uk record ↗