On Monday, British water utilities’ investors face lower payouts after sector regulator proposed lowering cap on shareholder returns to their lowest level. The sector was privatised approximately three decades ago.
Top players in the field include Thames Water, Pennon Group, Severn Trent and United Utilities. Invested capital returns will be capped at 5.02%, down from the current 6.64%, the Water Services Regulation Authority (Ofwat) said.
Ofwat elaborates the cut was about half of what it had signalled could be possible. Severn Trent, United Utilities and Pennon Group’s shares were between flat and down 1% by 0830 GMT. On Monday, Pennon Group and United Utilities released statements that they were reviewing Ofwat’s proposals.
In an effort to encourage investment, the regulator is improving or building infrastructure after British utilities. This comes after the utilities faced a series of fines last year for broken pipes and pollution.
Last year, water providers endured one of the hottest British summers with a series of supply shortages and hosepipe bans.
New goals also involve preparing in advance for drier weather by providing 450 million pounds to discover new water resources such as reservoirs or moving water from where there is plenty to places with less.
A spending package of 51 billion pounds ($65.43 billion) over the next five years has been set out, and a previous promise that customers will see a 50 pound reduction in average bills has been reiterated.
The spending is aimed at delivering “new, improved services for customers and the environment and resilience for generations to come,” Ofwat Chief Executive Rachel Fletcher said.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.