Water giants on collision course with Ofwat ahead of crunch ruling
Some of the water industry’s most prominent investors are said to have complained to the Treasury that regulator Ofwat is becoming politicised.
Investors that control suppliers including Anglian, Yorkshire, Affinity, South East and South Staffs reportedly met with officials this month, in a bid to pre-empt Ofwat’s final publication of its financial demands for the industry over the next five years.
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The regulator stunned the industry in July, when it rejected all but three leading suppliers’ business plans for 2020-2025, in a bid to clean up their act. Ofwat demanded water companies pay their debts faster, become more efficient and treat customers better. It is due to publish its final ruling in December.
Blue-chip investors such as Allianz, Singapore sovereign wealth fund GIC, Deutsche Bank and IFM Investors met with Treasury officials on 14 October to complain Ofwat was reacting too strongly to political pressure, according to the Sunday Times.
They also are also believed to have warned that the Competition and Markets Authority would be hit by a deluge of appeals, with at least five companies considering going to the competition regulator.
Nevertheless, they remain on collision course with Ofwat chief executive Jonson Cox, who used to head up Anglian Water and is now ploughing ahead with his attempt to force the industry to put customers first.
Ofwat said: “Our decision-making is independent from government and based on delivering the very best for customers. Investors have always made clear they value the independence of the regulatory regime.”
Meanwhile, the Labour party is also threatening to renationalise the sector, which has received billions of pounds-worth of investment from around the world since a number of former state-owned firms were privatised throughout the 1980s and 1990s.
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However, investors have overseen a litany of scandals such as sewage spills and water leaks, while taking big dividends, paying minimal corporation tax and piling debt onto companies.
The Treasury declined to comment.