Moody’s Investors Service has announced that its 2023 outlook for the UK water sector has turned negative, primarily reflecting increasing cost pressures in the current macroeconomic environment and, to some extent, early expectations for the next regulatory price review in 2024.

Ofwat is warning that water and wastewater companies are falling behind on their investment plans, with some companies using less than half of their allowances to improve their water network, leaving promised service improvements behind schedule or undelivered.

Moody’s is warning that under Ofwat’s Direct Procurement for Customers (DPC) framework for large infrastructure projects, construction risk will weigh on project credit quality.

S&P Global Ratings has revised its outlook for South East Water (Finance) Ltd.’s debt to negative from stable, as high inflation weights on the company’s credit metrics.

Ofwat has this morning announced that it has closed an enforcement case into Yorkshire Water after the company agreed a structured plan to strengthen its financial resources in the interests of customers.

S&P Global Ratings has lowered its issue ratings on Thames Water Utilities Finance PLC’s debt, owing to operational performance issues, high leverage, a heavy investment plan, and the current high inflationary environment.

Ofwat is warning that the delivery of multi-sector reservoir (MSR) systems cannot be subsidised by water customers, saying that “as a principle, public water supply customers should not subsidise other reservoir users and we expect costs to be fairly shared between users.”