THAMES WATER was accused of blackmailing customers and water regulator Ofwat today over a £500-million shortfall.

Investors for the heavily indebted utility giant pulled the plug on the funding lifeline due to be paid this week after claiming Ofwat’s business plan had made the firm “uninvestible.”

The move came after the regulator refused to bow to Britain’s biggest water supplier’s demand for a 40 per cent bill hike for its 16 million customers.