Water Companies: Insolvency
The question
To ask the Secretary of State for Environment, Food and Rural Affairs, what contingency plans are in place to protect consumers, affordability, and continuity of service in the event of a water company becoming financially unviable.
Answered by Emma Hardy
Under section 24 of the Water Industry Act 1991, if a water company becomes insolvent, the Defra Secretary of State and Ofwat (with the Secretary of State’s consent) can apply to the court to place the company into a Special Administration Regime. This allows the company to be rescued through measures such as debt restructuring or transferred as a going concern to new owners. A Special Administration Regime enables a company which provides vital public services (e.g. water, energy, rail) to continue to operate, and customers to continue to receive vital services.
The Government has committed in the Water White Paper to introduce a new Performance Improvement Regime (PIR) for poorly performing water companies, to enable a turn around, and minimize negative impacts of poor performance on customers and the environment.
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