S&P Global Ratings says that proposed bill increases set out in AMP8 business plans "stand in stark contrast" to the previous two price control periods AMP 6 and 7 when the focus was on customer bill reduction.

Commenting on the water companies’ business plans published this week, the ratings agency said the water sector is aiming to “increase investments significantly” to £96 billion by March 2030, compared to the allowed total expenditure of £51 billion for 2020-2025. This exceeds the aggregated regulatory capital value of the sector today - £94 billion as of March 2023 – S & P added.

S & P described the proposed bill increases as sizeable, pointing out that they will range from 10.5% for SES Water to 66% for Southern Water, excluding inflation.

The new report on the regulated utilities in England and Wales states:

“The expenditure will be predominantly debt-financed. As a result, regulatory gearing, meaning debt to regulated capital value as presented in the business plans, will rise in most cases….This is despite the availability of fresh equity in a handful of cases and even though some companies have received shareholder support to shore up financial resilience in the current price control period.”

For more information and comment on the UK water sector visit www.spglobal.com/ratingsdirect