Regulator has new options to take away investors’ ownership of water companies while leaving them dealing with debt
The writer is a KC specialising in energy and natural resources law. Colm Gibson, managing director in Berkeley Research Group’s economic regulation practice, also contributed As concerns about England’s privatised water companies grow and MPs debate the government’s contingency plans for the potential collapse of Thames Water, ministers have quietly introduced amendments to the special administration regime .
But in addition to claims under international investment treaties, investors know Ofwat has a duty to act in the manner it considers best to ensure companies can finance the proper carrying out of their functions. This includes “in particular through securing reasonable returns on their capital”. If a water company were to be put in to special administration because it was insolvent, investors could argue the regulator has failed to meet this duty, causing them loss.
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