Britain's largest water utility placed under special measures as it grapples with $20 billion debt pile

LONDON — British regulators on Thursday took the unprecedented step of placing the water utility for London and swathes of southern England into special measures, as the company seeks fresh investor funding to shore up its future.

Regulator Ofwat said Thames Water would come under heightened scrutiny and must re-evaluate its plans to improve operational performance, delivery and financial resilience. Ofwat approved £16.9 billion ($21.8 billion) in spending for the company to invest in improving services for customers and the environment — a sum below the £19.8 billion that Thames Water had requested.

The regulator meanwhile gave the company permission to raise customer bills by an average £99 annually over the next five years, nearly half of what it had requested.

In a statement on Thursday, Thames Water said its spending proposal was intended to "maintain reliable supplies of safe, high quality drinking water and to take away and effectively treat wastewater across London, the Thames Valley and Home Counties now and in the future."

The company questioned Ofwat's statement that its business plan was "inadequate," but said it would provide the regulator with further evidence to support its proposals and noted a final determination was not due until December 2024.

The crisis-hit company has more than 16 million customers and is seeking to avoid outcomes including temporary nationalization or being broken up. In spring this year, shareholders rejected its bid for a £500 million equity injection, while its parent company Kemble defaulted.

Thames Water is owned by a consortium of institutional shareholders across pension funds, sovereign wealth funds and private equity. Its biggest external shareholder is the Ontario Municipal