Good morning. Today we're talking about the Thames Water crisis, surging cocoa prices and the sentencing of a former crypto boss.

Big Stories

Thames Water woes

Thames Water faces a financial crisis threatening infrastructure upgrades and service disruptions. Shareholders deem the UK’s largest water supplier "uninvestible" due to strict regulations from Ofwat, the water regulator. These regulations, meant to control consumer costs, limit Thames Water's ability to generate revenue for investments. Shareholders have withheld a £500m cash injection, jeopardising Thames Water's turnaround plans for tackling chronic leaks and sewage spills. Ofwat, however, insists on exploring alternative funding options. This disagreement has escalated, with the government considering taking control of the company. Thames Water has proposed a 40% customer bill increase by 2030. Ofwat, whose approval is needed for any price rises, has so far pushed back on substantial bill increases.

Cocoa crisis

Cocoa prices have reached record highs, driven by concerns over a looming supply shortage. This surge marks a significant shift in the market, with futures prices tripling over the past year to reach over $10,000 per metric ton. Ghana, the world's second-largest cocoa producer, has been hit hard by adverse weather conditions and disease, impacting crop yields. More broadly, West Africa, the dominant region for cocoa bean production, has seen limited investment in new tree plantings since the early 2000s. As existing trees age, they become more susceptible to disease and drought, further reducing their output. The repercussions of this potential shortage are likely to be felt by consumers. To mitigate rising cocoa costs, chocolate manufacturers may resort to raising prices or implementing "shrinkflation," a practice where product size is reduced while the price remains the same.

Ex-crypto boss sentenced

Disgraced cryptocurrency entrepreneur Sam Bankman-Fried has been sentenced to 25 years in prison, half of what prosecutors asked for. The former FTX CEO was convicted in November of orchestrating a massive fraud that ultimately led to the collapse of his billion-dollar crypto exchange. Prosecutors argued that Bankman-Fried devised a complex scheme to deceive users by diverting customer funds to prop up his Alameda Research hedge fund and inflate the value of FTX's native token, FTT. This house of cards came crashing down in late 2022, leaving hundreds of thousands of customers out of pocket. The judge said SBF posed a real risk of committing more crimes in the future and rejected his claims of innocence, highlighting a lack of remorse.

Elsewhere...

Cooling prices: Household energy bills are set to fall to their lowest point in two years after Ofgem lowered its price cap in response to wholesale prices.

Leadership shake up: The CEO of Boeing will resign amid a sweeping overhaul of the planemaker’s management as it fights to repair its reputation following a terrifying cabin panel blowout.

Family affair: The owner of Sports Direct, Frasers Group, has promoted the boyfriend of Mike Ashley’s youngest daughter to the company’s board, it has emerged.

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Number of the Day

34 times

The ratio of the median home price to average earnings in Kensington and Chelsea, the least affordable area in the UK.

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