Thames Water - comment

We thought this would happen over the summer, but only now have Thames Water issued their ultimatum to the regulator. The current burden of penalty fees conflicts with the need to invest in the business, but the fate of an individual company is not the industry regulator’s primary concern. The matter would then be referred to the CMA for arbitration, and if that also fails, the Treasury will be the final instance. We think this will have to go all the way, and so are not too worried about the motions along the way.