Water UK, the body which represents the UK water industry, has confirmed that many water companies have been unable to accept Ofwat’s controversial proposals for licence modifications.
Today was the deadline for companies to respond to Ofwat’s consultation, published 26 October, concerning its revised proposals to amend companies’ licences.
Water UK stated: “Companies have considered these proposals carefully. Companies want to maintain investor confidence and the low cost of financing that the sector enjoys, which keeps customers' bills as low as possible - an objective which is shared by the Government.
“The majority of companies have been unable to accept Ofwat's proposals in their current form due to widespread concern within the industry about their potential impact on investor confidence.
“Companies have proposed to Ofwat licence changes to deliver what is needed for the 2014 price review, and are also willing to engage constructively with the regulator on possible changes for future price reviews beyond 2020.”
Severn Trent released a press release this morning saying it wanted changes made to the proposals, while Yorkshire Water has also now released a statement.
Yorkshire Water said changes to water companies’ licences would not be “in the best interests of customers or investors”, but Chief Executive Richard Flint said the company remained committed to working with Ofwat and other water companies to help deliver change and had played a pivotal role in developing alternative proposals which had now been put to the regulator.
The company added it was “with regret” that it had decided to reject Ofwat’s proposed changes but there were still serious concerns about the scope of the modifications which were undermining investor confidence. This could lead to higher borrowing costs, which would drive up customer bills unnecessarily, Yorkshire Water said.
It had been generally envisaged before the consultation deadline that many water companies would not accept Ofwat’s proposals, despite a clarification note on the proposals issued by the regulator on Tuesday.
Following the failure to agree, the matter is expected to be referred to the Competition Commission, unless the regulator and water companies come to an arrangement very soon.
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