Fitch Ratings has revised its sector Outlook for UK utilities to negative from stable as a result of weakened fundamentals, growing political pressure and challenging regulatory determinations.

The Outlook revision is, in particular, driven by poor forecast profitability of thermal generation and increased political and regulatory risk, demonstrated by the recent Competition and Markets Authority (CMA) investigation into the industry.

Fitch said the referral by Ofgem of the retail and wholesale energy market to the CMA for a full investigation on competiveness within the industry demonstrates increased regulatory risk and political interference at a time when affordable energy remains high on the agenda of policymakers.

Customer attrition has reached high levels, placing pressure on the profitability of the "Big 6" suppliers. This, along with the rapid decrease in dark spreads and continuing poor performance of spark spreads, places pressure on UK energy companies.

The ratings Outlook, however, remains Stable due to the diversified business profiles, previously established price controls and the financial flexibility of individual issuers. The Negative Outlooks on distribution network operators may be reviewed following the publication of the final determinations and discussions with companies on their business plans.