Ofwat set to refuse water companies' price increases; shares hit

28th May 2024 14:33

(Sharecast News) - UK water companies were under pressure on Tuesday following a report that Ofwat was set to refuse most companies' requests to hike consumer bills, with some getting as little as half of what they have asked for.

According to the Guardian, the decision from the water watchdog for England and Wales has been formally delayed until 11 July because of the general election. Its verdict, known as a draft determination, comes amid a growing crisis in the water sector.

Britain's biggest water monopoly company, Thames Water is facing nationalisation unless it can attract vast quantities of fresh capital. It has requested bill rises of 59% - after accounting for inflation - from the regulator.

The Guardian said these figures have been rejected by Ofwat based on the latest iteration of Thames's business and turnaround plans.

Sources said the documents were described as a "microwave job". They include "fag-packet figures" and reflect a board whose members appear determined to "sit on a deckchair on the Titanic", the sources told the Guardian.

Southern Water has requested the highest increase in bills among the utility companies of 91% to £915 a year, while Wessex Water has requested a 50% increase to £822 a year. Thames Water's is the second highest request for an increase in percentage terms, at 59% to £749, according to figures from the Consumer Council for Water.

An Ofwat spokesperson told the Guardian: "Thames Water is a business with a regulatory capital value of £19bn, £2.4bn of liquidity available, annual regulated revenue of £2bn and a new leadership team. They must continue to pursue all options to seek further equity. Safeguards are in place to ensure that services to customers are protected, regardless of issues faced by the shareholders."

At 1450 BST, shares in Severn Trent and United Utilities were down 2.5%, while Pennon was 2.9% lower.