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Sir Adrian Montague has quit as chair of Thames Water’s parent company after less than a year, as the utility faces a regulatory investigation over its decision to pay shareholders a dividend.
Montague, an experienced City troubleshooter who previously chaired British Energy and was deputy chair of Network Rail, was parachuted in as chair of Thames Water and its parent, Kemble Water, in June last year to restructure the debt-laden group.
Thames Water, the UK’s largest provider of water and sewage services, has come under increasing financial strain as higher interest rates make servicing its £18bn debt pile more expensive.
Britain’s largest privatised water utility has a byzantine corporate structure with multiple layers, only one of which is regulated by Ofwat.
The regulator is expected to rule in the coming weeks on whether Thames Water breached its licence conditions by paying a £37.5mn dividend to its parent company in October. Kemble needs the dividend to service its debts.
The utility’s licence means it has to consider requirements to look after customers and the environment before paying dividends, and ensure “financial resilience over the long term”.
In a statement on Friday, Thames Water said Montague’s resignation from Kemble was a “personal decision”, and that he “believes the time is right solely to focus on fully supporting the board and executive team . . . and “delivering the refocused turnaround plan”.
As well as resigning from Kemble Water, Montague has stepped down as a director of Thames Water’s subsidiaries. He will remain as chair and director of Thames Water Utility Limited, the only part of the group that is regulated by Ofwat.
Kemble Water’s only income are the dividends paid by Thames Water, which are funded by customers’ bills. Its 20 directors were paid £579,000 in the 12 months to the end of March, with the highest-paid receiving £59,000.
Kemble said Montague had not received any remuneration for his role as chair. His pay as chair of Thames Water Utilities has not been disclosed, but his predecessor, Ian Marchant, received £325,000 a year.