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Ofwat calls on water utilities to restrict shareholder payouts

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By Reuters
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(Reuters) – Britain’s water regulator moved on Tuesday to restrict some payouts to shareholders by water utilities, part of a bid to protect investment flows into the sector.

The Water Services Regulation Authority (Ofwat) said that if a water utility is at risk of losing its investment grade rating, it would be barred from making payouts to shareholders or removing money or assets from the business.

“These changes are intended to further safeguard customers’ interests by ensuring water companies remain financially robust and continue to attract investment,” Ofwat said in a statement.

The regulator’s calls come as water utilities face the threat of potential re-nationalisation if Britain’s opposition Labour Party comes to power, as per plans laid out by the more than century-old party.

Severn Trent <SVT.L> has flagged that state ownership could raise customer bills and lower investment, while its rival United Utilities <UU.L> called the possibility a “key area of uncertainty” in its full-year report.

Ofwat’s new measures, which were published on Tuesday, also include strengthening requirements for water utilities to maintain an investment grade credit rating, the regulator added

(Reporting by Muvija M in Bengaluru; Editing by Arun Koyyur; Editing by Jan Harvey)