United Utilities and Pennon to hike dividends in line with inflation as customer bills rise
United Utilities and Pennon Group plan to increase dividends as consumers grapple with significant bill increases over the next five years.
The water firms on Wednesday both said dividends would rise in line with inflation each year until 2030, following Ofwat’s final determination in December.
The regulator’s ruling, which sets customers’ bills for the next five years, means the typical water bill in the UK will jump by an average of £86 from April.
Water companies argue the bill hike is necessary to fix the sector’s creaking infrastructure, which has caused a surge in sewage leaks into British rivers in recent years.
United Utilities intends to invest £13bn in the next five years, £2.4bn of which will go into upgrading its sewage outflows, it said on Wednesday. It added the investment would support 30,000 jobs across the North West.
Pennon Group pledged a record £3.2bn in investment, while also announcing plans to raise around £490m via a fully underwritten rights issue.
Louise Beardmore, chief executive officer at United Utilities, insisted the firm was committed to “maintaining affordable bills and providing support to customers who need it most.
“With a sector leading affordability package totalling £525m, we’re putting in place financial support to approximately one in six households across the North West – that’s approximately a 70 per cent increase in the level of customer support provided.
“Most importantly, today’s announcement means we can move forward and deliver the step change in performance we all want to see.”
Susan Davy, Pennon Group chief executive officer, said: “We have listened to customers, communities, and stakeholders.
“With these record levels of investment, we will be transforming what we do, fixing storm overflows, building new reservoirs and creating natural habitats for wildlife. This is so much more than just about water.”