Ofwat welcomes £4.6bn of investment to the water sector
The water sector has attracted £4.6bn in additional money from shareholders since 2020, helping to improve the financial resilience of water companies and help fund increased investment for the 2024 price review, according to Ofwat.
This comes after Ofwat has made clear its requirement for water companies to take action to secure their long-term resilience.
Today’s report on the Monitoring Financial Resilience (MFR) of water companies shows £1.4bn of that equity has come in the previous year, with Thames securing £500m, Yorkshire Water £400m, Southern Water £375m, Portsmouth Water £120m and SES Water £7m. This is additional money that has been put into the business from shareholders, not customers. This trend has continued a Severn Trent has recently announced a further £1 billion to finance its investment programme.
The MFR report sets out Ofwat’s ongoing approach to company financial monitoring and engagement. It places water companies into three distinct categories: standard, elevated concern or action required.
This year’s report, which covers the financial year of 2022-23, sees eight companies categorised as standard, four marked as elevated concern and four companies as requiring action. Where companies find themselves in a category of higher concern, Ofwat expects companies to take action to address their financial resilience. Companies in this category are subject to a range of regulatory actions, which include increased regulatory challenge, scrutiny and monitoring and an expectation that actions are put in place to improve financial resilience. In some instances, this requires companies to action a turnaround plan.
David Black, Chief Executive of Ofwat said:
“We expect companies to maintain a level of financial headroom so they can manage periods of volatility and meet their obligations to customers and the environment. We’ve been calling for the water sector to be strengthened by further investment that is why we welcome the £4.6bn of additional equity.
“Where we have seen cause for concern, we have also seen some companies responding to the challenge and we expect them to continue to work on improving their financial resilience. This is particularly notable in the cases of Yorkshire Water and Portsmouth Water who last year we had categorised as requiring action. They have taken clear actions and this year, have been moved out of our bottom category. We expect to see more companies following this trend and will continue to closely monitor their progress.”
This year’s MFR report covers the year ending 31 March 2023 prior to new licence conditions being introduced. New powers were introduced in May 2023 that will see Ofwat able to take enforcement action if the payment of dividends doesn’t take account of water company performance or financial resilience over the long term.
Latest News from
Lightning technique used to eliminate 'forever chemicals' wins award in Ofwat innovation prize20/02/2024 10:15:00
Technologies that use “lightning in a jar” and a chemical process with only water and oxygen as byproducts are being developed as potential alternatives to chlorine in disinfecting drinking water, have been awarded a share of £4.5 million by water economic regulator Ofwat in its first ever Water Discovery Challenge.
Water companies face fines for poor customer service12/02/2024 15:15:15
From today (12 February 2024) Ofwat has new powers to act against any water company that provides poor customer service in breach of a new licence condition, which could see the regulator impose fines of up to 10% of the company’s turnover.
Average bills press statement 2024/2502/02/2024 16:10:00
Ofwat’s full statement is as followed following the announcement from Water UK regarding new charges from water companies for 2024/25.
Customer research lifts the lid on sewage stink in Camberley30/01/2024 13:20:00
Ofwat and CCW have today published the results of research into customers’ experience of how Thames Water handled an incident in Camberley in 2023, in which a foul smell from a sewage treatment works, which lasted for months, affected thousands of people in the local area.
Ofwat sets out new rules to protect vulnerable customers14/12/2023 15:25:00
Ofwat has today (Thursday 14 December 2023) set out clear minimum standards for water companies to ensure that those customers who need extra help are provided with the level of service they require.
Ofwat launches investigation into South East Water's supply resilience17/11/2023 10:25:00
Ofwat has opened an enforcement case into South East Water to investigate whether it has failed to develop and maintain an efficient water supply system.
Ofwat confirms majority of companies will return money to customers15/11/2023 10:25:00
Ofwat yesterday confirmed the financial penalties and payments for all water companies for the 2022-23 year, with the majority of companies having to return money to customers.
Ofwat sets out details on crack down on exec pay08/11/2023 16:20:00
Ofwat has published its assessment of how performance related pay awarded to water company executives during 2022-23 was aligned to delivery for customers and the environment, and overall company performance. The report looks at the 16 largest companies in England and Wales and is the latest step taken by the regulator in its crack down on inappropriate pay outs in the sector.
Ofwat calls on water companies to prove to customers they can deliver on their promises to clean up Britain's rivers and seas19/10/2023 16:10:00
Ofwat is calling on water companies to use the next 12 months to prove to customers that they can deliver better service and improve the environment. The latest Water Company Performance Report showed that after three years of the 2020-25 period, 13 out of the 17 water and wastewater companies had not spent their forecast enhancement allowance