Surprise as Thames chief Owens quits
The sudden announcement that David Owens, chief executive of Thames Water, has stepped down has taken the industry by surprise. In the announcement on 30 November, Owens said, "After leading the turnaround of Thames Water for the last three years, I am now looking forward to my next challenge."
Although he did not mention Ofwat’s recent price determinations, insiders say it is likely Ofwat’s final determination on pricing was a factor in his decision. Owens had warned of a ‘funding gap’ in Thames’ infrastructure project plans as the price of debt has risen during the recession.
In the group’s interim results for the six months to 30 September, Owens said: “The regulatory model in the economic downturn means our revenues are lower than expected when Ofwat set the plan at Final Determination 2004 and the new financial landscape means that raising new debt is more expensive than in previous years.
“These factors, along with the increase in bad debt, will make it more difficult to fund the essential investment in the network that is required.”
Thames Water posted a 15% rise in pre-tax profit for the period, up to £225.5M and had plans for £5.5B in capital works between 2010 and 2015. The proposals would have been funded by a 17% rise in bills before inflation, but Ofwat has rejected this, saying that the firm would be limited to a 3% increase.
Owens has been a controversial figure for the firm since taking over in 2006 and has been vocal in his criticisms of Ofwat over funding.
Thames is considered to be the most likely water company to challenge Ofwat’s decision with the Competition Commission.
A search is now under way for a new CEO to lead Thames Water, which is owned by Macquarie Bank.
Meanwhile, Martin Baggs will fill in. Baggs has been a member of the Thames Water Board since December 2006 and is former managing director of South East Water.