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Water companies underspending on investment plans says regulator

Published 06/12/2022, 14:21
Updated 06/12/2022, 14:43
© Reuters.  Water companies underspending on investment plans says regulator

© Reuters. Water companies underspending on investment plans says regulator

Proactive Investors - Water companies were slated today for falling behind on their investment plans by Ofwat, which warned it expects them to deliver on service improvements with “No ifs, no buts”.

Fourteen companies had underspent their budget for improving their water network while eight underspent on their wastewater network, said the regulator.

Ofwat cited home counties-focused Affinity and Northumbrian for spending just 47% and 48% of their budgets on the water network.

Yorkshire Water and South West, owned by listed group Pennon, were also highlighted for spending “just 20% and 39% of their wastewater allowance”.

South West has frequently been in the firing line for the state of the water on its beaches and coastlines due to sewage discharges.

David Black, Ofwat’s chief executive, added: “The lack of investment from companies we’re seeing at the moment is extremely disappointing, especially in light of the poor performance for customers and the environment.

“I am expecting these companies to get a grip on their investment programme and make up for the shortfalls.”

Water companies in firing line again over sewage dumping

Shares in Pennon fell 2.4% to 933p with the group also on the receiving end of a downbeat note from broker JP Morgan.

The US bank said it is cautious ahead of the publishing next week of the methodology for the period starting in April 2025, adding it believes there might be a nasty surprise.

JPM also sees earnings downgrades continuing next year as inflation will not be passed through fully to customers.

United Utilities is downgraded to neutral alongside Pennon, while Severn Trent (LON:SVT) is the most expensive share and rated underweight.

Read more on Proactive Investors UK

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