Ofwat today launched a consultation into any regulatory issues arising from the new ownership of Thames Water.

On 1 December 2006 Kemble Water Limited, a consortium led by Macquarie's European Infrastructure Funds, completed its acquisition of Thames Water Holdings Plc, the UK parent company of Thames Water Utilities Limited (Thames Water). Thames Water is an appointed water and sewerage company regulated by Ofwat.

On a change of ownership, Ofwat, in the interests of water consumers, looks to ensure that the new owner of a water company is fit and proper to provide such an essential service. In accordance with this, it is consulting on the regulatory issues arising from the acquisition. Ofwat is proposing a number of amendments to Thames Water's licence to ensure that it has sufficient financial resources and is appropriately ringfenced from the rest of Kemble Water Limited.

Ofwat is inviting views on:

* The capacity of Kemble Water Holdings Limited (the UK holding company of Kemble Water Limited) and its consortium of investors to own a regulated company.;

* The board structure put in place by the consortium and its compatibility with good corporate governance of the regulated company;

* Which entities should provide parent company undertakings to Thames Water;

* The implications for Thames Water of the proposed long term financial structure of Thames Water and the Thames Water group; and

* The adequacy of the proposed licence amendments.

Both Thames Water and its new owners are fully aware that the outputs and price limits set in 2004 and the undertaking Ofwat received from Thames Water in July 2006 remain in place and will require delivery under the new ownership.