6 ms·

The thing is, if a water company is in good financial health, with low debt and lots of money to invest in infrastructure, it’s completely legal for private equ

The thing is, if a water company is in good financial health, with low debt and lots of money to invest in infrastructure, it’s completely legal for private equity to buy the company, stop investing in infrastructure, take out loans until a third of customer bills go on interest payments, and take the loaned money as ‘management fees’. Then dump untreated sewerage in rivers and demand more money from bill payers, because they “can’t afford” to maintain the infrastructure. In most industries a company so poorly managed would lose customers, go bankrupt, and be replaced by a better run company. But water companies? They have a monopoly, and everyone needs water to live.

krona 1y ago
You're arguing a kind of strawman of unbridled economic liberalism which hasn't existed in England since probably the late 19th century, if at all.
- ellen364 1y ago
  Based on "a third of customer bills go on interest payments", I'd guess the original comment was about Thames Water. In 2023 their interest payments were 28% of revenue. They also made the news for dumping particularly large volumes of sewage into rivers. https://www.theguardian.com/money/2023/dec/18/water-firms-use-up-to-28-percent-of-bill-payments-to-service-debt-in-areas-of-england https://www.theguardian.com/money/2023/dec/18/water-firms-us... https://www.bbc.co.uk/news/uk-england-london-67357566 https://www.bbc.co.uk/news/uk-england-london-67357566
  - krona 1y ago
    > they also made the news for dumping particularly large volumes of sewage into rivers Yes and they have been fined for doing so, thus proving my point. These companies have statutory obligations. See the Water Industry Act 1991 and subsequent legislation.
    - tomrod 1y ago
      So sewage wasn't dumped, because the law prevented it? Or sewage was dumped, and it was against the law? I'm having a hard time reconciling the theoretical claims made in the thread with the blinding light of what actually happened.
      - krona 1y ago
        Well sewage has to be dumped (especially in storm conditions), and the water companies have licences to do so. However Thames was found to be in breach of the license, so were fined. Many people claim these things happen because "shareholders" however it was completely widespread practice to dump sewage before privatisation and the system is literally designed to do so. This doesn't make it OK, however.
        wizzwizz4 1y ago
        Sewage doesn't have to be dumped. Simply separate your black water and grey water. Storm drains can go to rivers (if the rivers have capacity – if not, it's sometimes easier to give the river more capacity than to build more sewers), and the amount of water in sewage pipes will be independent of the amount of rain. Sure, the sewers might not currently be designed that way, but that can be changed. (It's a logistical challenge, but it needs to be done.)
        MichaelZuo 1y ago
        This is such a pedantic point. How does it add anything to the conversation?
        wizzwizz4 1y ago
        If a sewer system can be designed such that dumping sewage need never occur, you can earmark some of the budget for gradually introducing this property into your sewer system. The more such improvements you make, the less often you'll have to dump sewage, until you never have to. Thames Water could have done this.
qcnguy 1y ago
Governments don't pay for infrastructure by saving up surplus tax revenue in a piggy bank. They take out loans to pay for it, same as the water companies do. The UK pays around 8% of its spending on interest payments and that's rising rapidly, despite the fact it can print money. British water companies are in lots of debt because they aren't really private. They're forced to spend huge sums to repair Victorian-era infrastructure whilst the government sets the prices they're allowed to charge. Decades of populist left or centre-left governments have kept the prices artificially low whilst requiring investment, resulting in a huge accumulation of debt. This is exactly what would have also happened if the water companies were not privatized, so the fake "privatization" is a red herring. It's the expected outcome of price controls, not whether the utilities are owned by the state or not.
- happymellon 1y ago
  You really twist yourself around here. But this? > Decades of populist left or centre-left governments have kept the prices artificially low whilst requiring investment, resulting in a huge accumulation of debt. Bloody Tories, the whole problem isn't that they were in charge for 32 years from 1979-2024, it's the 13 years of Blair. They have been powerless to stop the spooky Left and fix the pipes before the water was privatised (or anything afterwards, because obviously it's still the Left)!
  - qcnguy 1y ago
    The Tories are a centre-left party. That's why they lost the support of conservative voters at the last election and are now in the doldrums, with much of their base having defected to Reform.
    - ahartmetz 1y ago
      Maybe they are now (I doubt it), but they surely weren't under Thatcher.
      - qcnguy 1y ago
patanegra 1y ago
Can you show me which UK water companies are in such a situation? My provider is Thames Water. They are losing money.
- swiftcoder 1y ago
  > My provider is Thames Water. They are losing money. Are they losing money because costs exceed revenue, or are they losing money because they are servicing massive loan interest on money they already distributed to shareholders?
  - jermaustin1 1y ago
    Page 10 of their 24/25 annual report says they only pay 8% toward interest payments, the largest outgoing is infrastructure, then opex. https://www.thameswater.co.uk/media-library/l13deqmw/thames-water-annual-report-2024-25.pdf https://www.thameswater.co.uk/media-library/l13deqmw/thames-...
    - patanegra 1y ago
      In the last 10 years, they did £18107.3m turnover, and cumulative -1180.3m loss. Poor shareholders, mainly Ontario Municipal retirement fund pensioners, who are the biggest ones (32%) and retired British academics (20%).
    - Retric 1y ago
      That doesn’t answer the question. However, any money paid to shareholders while accumulating debt, including deferred maintenance, etc was financial smoke and mirrors not actual profit.
      - VirusNewbie 1y ago
        Does the government not do this?
        thfuran 1y ago

krona 1y ago

You're arguing a kind of strawman of unbridled economic liberalism which hasn't existed in England since probably the late 19th century, if at all.

ellen364 1y ago
Based on "a third of customer bills go on interest payments", I'd guess the original comment was about Thames Water. In 2023 their interest payments were 28% of revenue. They also made the news for dumping particularly large volumes of sewage into rivers. https://www.theguardian.com/money/2023/dec/18/water-firms-use-up-to-28-percent-of-bill-payments-to-service-debt-in-areas-of-england https://www.theguardian.com/money/2023/dec/18/water-firms-us... https://www.bbc.co.uk/news/uk-england-london-67357566 https://www.bbc.co.uk/news/uk-england-london-67357566
- krona 1y ago
  > they also made the news for dumping particularly large volumes of sewage into rivers Yes and they have been fined for doing so, thus proving my point. These companies have statutory obligations. See the Water Industry Act 1991 and subsequent legislation.
  - tomrod 1y ago
    So sewage wasn't dumped, because the law prevented it? Or sewage was dumped, and it was against the law? I'm having a hard time reconciling the theoretical claims made in the thread with the blinding light of what actually happened.
    - krona 1y ago
      Well sewage has to be dumped (especially in storm conditions), and the water companies have licences to do so. However Thames was found to be in breach of the license, so were fined. Many people claim these things happen because "shareholders" however it was completely widespread practice to dump sewage before privatisation and the system is literally designed to do so. This doesn't make it OK, however.
      - wizzwizz4 1y ago
        Sewage doesn't have to be dumped. Simply separate your black water and grey water. Storm drains can go to rivers (if the rivers have capacity – if not, it's sometimes easier to give the river more capacity than to build more sewers), and the amount of water in sewage pipes will be independent of the amount of rain. Sure, the sewers might not currently be designed that way, but that can be changed. (It's a logistical challenge, but it needs to be done.)
        MichaelZuo 1y ago
        This is such a pedantic point. How does it add anything to the conversation?
        wizzwizz4 1y ago
        If a sewer system can be designed such that dumping sewage need never occur, you can earmark some of the budget for gradually introducing this property into your sewer system. The more such improvements you make, the less often you'll have to dump sewage, until you never have to. Thames Water could have done this.

qcnguy 1y ago

Governments don't pay for infrastructure by saving up surplus tax revenue in a piggy bank. They take out loans to pay for it, same as the water companies do. The UK pays around 8% of its spending on interest payments and that's rising rapidly, despite the fact it can print money. British water companies are in lots of debt because they aren't really private. They're forced to spend huge sums to repair Victorian-era infrastructure whilst the government sets the prices they're allowed to charge. Decades of populist left or centre-left governments have kept the prices artificially low whilst requiring investment, resulting in a huge accumulation of debt. This is exactly what would have also happened if the water companies were not privatized, so the fake "privatization" is a red herring. It's the expected outcome of price controls, not whether the utilities are owned by the state or not.

happymellon 1y ago
You really twist yourself around here. But this? > Decades of populist left or centre-left governments have kept the prices artificially low whilst requiring investment, resulting in a huge accumulation of debt. Bloody Tories, the whole problem isn't that they were in charge for 32 years from 1979-2024, it's the 13 years of Blair. They have been powerless to stop the spooky Left and fix the pipes before the water was privatised (or anything afterwards, because obviously it's still the Left)!
- qcnguy 1y ago
  The Tories are a centre-left party. That's why they lost the support of conservative voters at the last election and are now in the doldrums, with much of their base having defected to Reform.
  - ahartmetz 1y ago
    Maybe they are now (I doubt it), but they surely weren't under Thatcher.
    - qcnguy 1y ago

patanegra 1y ago

Can you show me which UK water companies are in such a situation? My provider is Thames Water. They are losing money.

swiftcoder 1y ago
> My provider is Thames Water. They are losing money. Are they losing money because costs exceed revenue, or are they losing money because they are servicing massive loan interest on money they already distributed to shareholders?
- jermaustin1 1y ago
  Page 10 of their 24/25 annual report says they only pay 8% toward interest payments, the largest outgoing is infrastructure, then opex. https://www.thameswater.co.uk/media-library/l13deqmw/thames-water-annual-report-2024-25.pdf https://www.thameswater.co.uk/media-library/l13deqmw/thames-...
  - patanegra 1y ago
    In the last 10 years, they did £18107.3m turnover, and cumulative -1180.3m loss. Poor shareholders, mainly Ontario Municipal retirement fund pensioners, who are the biggest ones (32%) and retired British academics (20%).
  - Retric 1y ago
    That doesn’t answer the question. However, any money paid to shareholders while accumulating debt, including deferred maintenance, etc was financial smoke and mirrors not actual profit.
    - VirusNewbie 1y ago
      Does the government not do this?
      - thfuran 1y ago