Ofwat seeks to strengthen companies' financial resilience
Ofwat has called on water companies to adopt a common set of standards that would restrict pay-outs to shareholders if their credit rating is at risk.
The regulator revealed a new package of measures that it said are intended to further safeguard customers’ interests by ensuring water companies remain financially robust and continue to attract investment.
The measures include strengthening requirements to maintain an investment grade credit rating and accepting restrictions on pay-outs to shareholders in certain circumstances.
The 'cash lock-up' conditions mean that if a water company is at risk of losing its investment grade rating, it is barred from making pay-outs to shareholders or removing money or assets from the business.
Ofwat said ensuring that companies have an investment grade credit rating would provide greater clarity of expectations.
Rachel Fletcher, chief executive at Ofwat, said: “Water companies must provide resilient services to their customers. To do that, they need to be financially resilient.
"To help secure that, we want to introduce clearer, consistent requirements and protections.
“These protections will give greater assurance to customers about all water companies’ financial stability and long-term resilience.”
Of the 17 water companies, only Bristol Water, Welsh Water and Wessex Water do not have a cash lock-up licence provision of any form at present.
- Southern Water beefs up security with SmartWater Southern Water has implemented an invisible security tagging system at hundreds of sites across its region as part of an... Read More >
- Solar first for Anglian perimeter protection Anglian Water is the first water company to adopt solar-powered electronic perimeter security. German technology company... Read More >
- Southern Water seeks customer views on hosepipe bans Southern Water is consulting its customers about how often it is acceptable to introduce hosepipe bans a drought. Read More >
- Scottish Water starts planning for the long term For SR21, Scottish Water is moving away from the traditional approach to business plans and developing a blueprint for the... Read More >
- Football teams and water companies: Closer than you think New season, new league, new challenges... Egremont Group's Owen Quinn and Alex Graham on the parallels between football... Read More >
- Abstract concept: How can water companies reduce abstraction? Despite concerns over supplies, water companies face pressure to reduce abstraction. As part of our Utility of the Future... Read More >
- The end of 'business as usual' in the water sector? James Connolly, head of partnerships at digital asset and works management company eviFile, assesses the message coming... Read More >
- Data Protection and Brexit - Is your organisation prepared? Guidance to help businesses and charities continue to comply with data protection law after the UK leaves the EU Read More >