The government has stated that it is ready for a "range of scenarios" in response to fears that Thames Water may be about to collapse.
Ministers steered clear of commenting on the company's status but claimed that Ofwat, the regulator, kept an eye on "the financial position" of all water companies, according to BBC News.
No Interruptions to Water Supply
There will be no interruption in the supply of water for 15 million people in London and the South East thanks to Thames Water, the largest water company in the UK.
The company is discussing backup plans for the company with ministers and Ofwat, according to Sky News.
Placing Thames Water under a special administration system (SAR), which would result in the government temporarily taking control of it, is one option. The most recent instance of this was with energy provider Bulb after it encountered financial difficulties.
The Department for Environment, Food, and Rural Affairs (Defra) responded that the reports were "a matter for the company and its shareholders" when questioned about them.
After only two years in the position, Thames Water's chief executive Sarah Bentley resigned on Tuesday. It happened a few weeks after she was instructed to decline her bonus due to how the business handled sewage spills.
Her departure comes amid concerns about the company's financial viability, however, the corporation has not provided a reason for it. It has been pressured to perform better as a result of complaints about how it handled sewage contamination and leaks.
The corporation leaks more water than any other water utility in the UK, losing enough water from its pipelines each day to fill 25 Olympic-size swimming pools.
The owners of Thames Water, a group of institutional investors, invested £500 million in the company last year and promised to invest an additional $1 billion to help it turn things around. The company is reportedly scrambling to raise £1 billion to support its finances.
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Debts of Water Firms
Since being privatized in 1989, water firms have accrued substantial debts totaling around £60 billion, with Thames Water's debt being £14 billion.
Concerns over Thames Water's capacity to service that debt and raise the huge sums of money required to modernize its infrastructure in the face of growing inflation and increased interest rates have persisted for a long time at Ofwat, the water utility regulator. Its owners have supported the decision to withhold dividend payments from external shareholders for the past five years.
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