Thames Water has appointed a former British Gas executive as its new boss with a pay package of up to £2.3m a year and a brief to turn around the heavily indebted utility.
Chris Weston takes up the role on 8 January and replaces Sarah Bentley, who resigned with immediate effect in June after three years in post amid a backlash over the company’s dumping of sewage in British waterways.
News of the appointment came in a week when MPs and the public learned of the scale of the debt burden that years of private ownership had placed on Thames Water’s finances. Executives said the water supplier, which has £18.3bn of debts, did not have enough money to pay a £190m loan due in April next year.
The UK’s largest water company, with 15 million customers in London and the Thames Valley, the utility has been led by interim bosses, Cathryn Ross and Alastair Cochran, since Bentley’s departure.
Weston stepped down as chief executive of Aggreko in November 2021, months after the power generating equipment company was delisted from the London Stock Exchange and bought by private equity firms in a £2.3bn deal. He previously spent 13 years at Centrica, eventually taking the top job at its British Gas Services consumer business in 2014, which he held for a year before joining Aggreko.
Weston, who served in the armed forces’ Royal Artillery after university, will now face the challenge of steering Thames Water through a turnaround, and could be paid a hefty annual package if he succeeds.
Thames Water is handing its new boss an annual salary worth £850,000, on top of £102,000 in yearly pension payments, and a £15,000 car allowance. He is also eligible for an annual bonus worth up to 156% of his salary – or £1.3m – that could swell his total pay to £2.3m.
Those payments are likely to prove controversial without major improvements to performance, with his predecessor Bentley having faced heavy criticism for receiving pay that peaked at £2m in 2021-22. Bentley said in May that she would forgo her bonus and any payments due under long-term incentive plans for the 2022-23 financial year.
Weston inherits a firm seeking £2.5bn of equity from shareholders to turn itself around, on top of £750m already pledged.
It is also aiming to increase customer bills by 40% to pay for new investment in its treatment works, pipes and sewage outflows, as it faces problems over rising pollution incidents, infrastructure failings and continued raw sewage discharges into the environment.
The company is also preparing to connect up London to the Thames Tideway, London’s £4.5bn “super sewer”, which is due to be finished in summer 2024 and be fully operational by 2025.
Weston’s priorities will be shaped by the conclusions of the regulator, Ofwat, which is examining Thames’ five-year business plan, submitted in October.
Executives told MPs on the environment, food and rural affairs committee this week that if Ofwat rejected its business plan and the bill rises it had asked for, the company would be left in huge difficulties.
However, Ofwat is investigating Thames Water over the £37.5m of dividends it paid to its parent company, Kemble Water Limited, in the six months to 30 September, which could have meant the company breached the terms of its licence.
The regulator’s chief executive, David Black, told MPs this week that Ofwat was prepared to take action which could lead to the company’s administration. “We have never seen a water company fail but that remains a possibility,” he said. “If we have to take steps that lead to the failure of the parent company then we are prepared to do so.”
Thames Water’s chairman, Adrian Montague, said that Weston “has a proven track record working in regulated environments, turning round business performance and improving customer experience.”
Weston said he planned to focus on “delivering the turnaround that the business has outlined and improving performance over the next few years”.
Thames’s largest investor is Ontario Municipal Employees Retirement System (Omers), a Canadian pension fund. Its investors also include the Universities Superannuation Scheme, China Investment Corporation and Abu Dhabi’s Infinity Investments.
Macquarie, the Australian infrastructure investor that previously owned Thames and exited in 2017, has been criticised for building huge debts at Thames Water to pay dividends to shareholders.