UK water groups pour £26m down the drain in dispute with regulator

Four of the UK’s largest water companies have spent at least £ 26m on appeals to competition watchdogs, raising concerns about the cost of regulatory systems.

According to a document released by the Competitive Markets Authority, the dispute with water regulator Ofwat was £ 8.3 million for Yorkshire water, £ 7.6 million for Anglia water, £ 6.5 million for Northumbria water and £ 3.5 million for Bristol water.

The total cost is expected to be much higher as the numbers mainly cover only external spending Lawyers and consultants.. This is significantly higher than Ofwat’s £ 2.8m and CMA’s £ 3.1m on appeal.

Since water companies are monopoly companies, Ofwat sets the revenue that investors can earn, the amount they can charge their customers, and spend every five years on infrastructure such as reservoirs and pipes.

However, there are concerns that the review process will be unnecessarily tedious and costly.

The water company said it spent about £ 140m a year on reviews and added at least £ 15 a year to its customers’ bills, even without the cost of a CMA appeal.

Yorkshire Water, which provides water and sewage services to approximately 5 million people and 130,000 companies, said:

last year’s appeal It was the largest competition regulator since privatization 31 years ago.

Water companies claimed that Ofwat prioritized price cuts over necessary investments in response to protests against leaks and pollution, including at least 400,000 recorded sewage spills into rivers and seas last year.

Water regulators were concerned that investors (private-equity and sovereign wealth fund clutches) would “outperform” or make their investments cheaper. It shares some of the excess under a complex regulatory system.

CMA has rejected Ofwat and allowed a headline rate of return of 3.2% over the next five years. This is higher than the 2.96% recommended by water regulators. Water charges will also drop by an average of £ 34 instead of £ 50, which Ofwat advised.

Dieter Helm, a utility specialist at Oxford University seeking to reform the regulatory system, said the appeal of CMA was a profitable investment for water companies, adding an additional 0.3% to the rate of return.

But he added that this issue indicates a lack of regular review processes. “They are no longer fit for the purpose of tackling climate change and providing the long-term investment needed to rebuild inadequate infrastructure,” he said.

According to the CMA, consumers pay an average of £ 400 a year for water and sewage, of which about 20% is spent lending debt and returning to shareholders.

“We are trying to keep costs as low as possible, and this work was fully funded by our existing budget,” Ofwat said.

“It’s important that we can protect the interests of our customers and the environment,” he added.

According to a University of Greenwich survey, water companies Borrowing £ 51 billion After being privatized debt-free in 1989, it paid a dividend of £ 56 billion by 2018. This suggests that most of the borrowing was used to pay revenue rather than investing in network infrastructure.

UK water groups pour £26m down the drain in dispute with regulator Source link UK water groups pour £26m down the drain in dispute with regulator

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