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Thames Water powers ahead in search for new chief

by ace
File photo dated 2/8/2016 of the logo of water company Thames Water seen through a glass of water. Utilities regulator Ofwat has warned four water companies that it has "substantial concerns" over their business plans for the next five years.

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Britain's largest water company is forming a top energy executive to be its new boss before a general election that could trigger the nationalization of the company.

Sky News found that Thames Water Utilities has identified Basil Scarsella, the chief executive of UK power networks (UKPN), as the top candidate to be its next CEO.

Scarsella, an Australian whose previous duties include serving on the executive committee of FIFA, the world's governing body, is considered to be among a small number of people still running for Thames Water management.

The water and waste group, which has a total of 15 million customers, has been looking for a new boss since May, when it fired Steve Robertson after less than three years in office.

Thames Water, owned by a consortium of powerful state-backed pension funds and investors, may decide to postpone the appointment of Robertson's successor until after the election.

An announcement is almost certain to occur by the end of the year.

The nationalization of Britain's water companies has long been a promise of the current labor leadership team led by Jeremy Corbyn and John McDonnell.

The party's election manifesto is expected to be published next week.

Estimates vary on the likely cost of realizing this threat against an industry that has been affected by a poor water leakage history and repeated sewage treatment scandals.

In June, Southern Water received a record £ 126 million fine from regulator Ofwat for wastewater handling, intensifying pressure on the industry to clean up its actions.

The workforce signaled that the water sector would be the top priority on its nationalization agenda, which would also include Royal Mail, power grid operators and potentially Royal Bank of Scotland – most of which already belong to taxpayers.

On Thursday, McDonnell added BT Group's broadband infrastructure division, Openreach, to the list of assets that would lead to public ownership.

His promise to provide free full-fiber broadband by 2030 was immediately derided by Boris Johnson, the prime minister, while the telecommunications giant argued that it would cost Labor's estimated 20 billion pounds several times over.

However, there is little doubt that the party's promise to nationalize industries widely viewed as providing inadequate customer service has affected some voters.

Moody & # 39; s, the credit rating agency, has suggested that taking control of UK water companies could cost just £ 14.5 billion, far below the market value of the business.

Thames Water was acquired by Macquarie, the Australian infrastructure investor, in 2006 in a £ 8 billion deal.

Macquarie sold several stakes to third party funds before unloading its remaining stakes in 2017.

The company's current investor base is led by Omers, the Canadian pension fund, which owns just under a third of the shares.

The Universities Superannuation Scheme (USS), which manages the retirement savings of British academics, is the second largest shareholder, with funds from Abu Dhabi, Australia, Canada, China and the Netherlands, among other Thames Water investors.

Robertson's departure in May came after a period of poor operating performance, with Thames Water under increasing pressure to contain the vast amounts of water leaking from its network.

Ian Marchant, the company's interim chief executive and former chief of SSE, the energy supplier, leads the search for Robertson's successor.

Mr. Scarsella has been managing UKPN since 2011, after joining Northern Gas Networks, where he has been CEO since 2005.

Both companies are controlled by Li Ka-shing, the Hong Kong billionaire who is among Asia's richest people.

Thames is easily the largest UK water and sewage service company with annual revenues of £ 2 billion.

It has 3 million residential customers, 15 million in total when accounting for its waste services and over 6000 employees.

The company's service area extends from Gloustershire and Wiltshire in the west, across London and the Thames Valley, to the western shores of Essex and Kent in the east.

Sources close to Thames Water said the choice of their next chief executive was "critical" to the business and that the new boss's priority would be to improve his reputation and strengthen financial performance.

The company has invested, on average, about £ 1 billion a year over the past 15 years in strengthening its infrastructure and customer service, one source said.

In 2017, Thames Water was fined more than £ 20m for dumping raw sewage into the Thames and its tributaries, with a second minor penalty applied the following year.

Both were related to incidents prior to Robertson's time as chief executive.

The water industry is also facing enormous pressure from price controls to be imposed by Ofwat shortly after next month's election.

Several major players are preparing to take the regulator to the Competition and Markets Authority if they are hit by what they consider unfair decisions.

In yet another sign of the new scrutiny the industry is facing, its main lobby group, WaterUK, announced this week that it was replacing its own boss.

Christine McGourty, a former BBC journalist and energy lobbyist, will take the role in the coming weeks.

Thames Water declined to comment specifically on its talks with Scarsella this weekend, but said: "Thames Water's board, led by Ian Marchant, is conducting a thorough search for a CEO and has selected some high quality individuals.

"It would be inappropriate to comment on an ongoing process and we will make an announcement when a decision is made."

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