Ofwat ‘opening the door’ to mergers

Ofwat has not ruled out potential mergers within the sector, as long as any deals see customers benefit.

Speaking at Ofwat’s City Briefing today, chief executive Cathryn Ross, said that “changes to the industry structure may be appropriate”.

She added: “I would be surprised if 18 vertically integrated companies was the most appropriate structure.”

Ross stated that the most important concern of the regulator, if any structural changed were to take place, was that “the benefits go through to customers”.

Although she did not mention mergers specifically, Ross did not rule them out and stated the regulator was “open to these conversations”.

Ross added: “We do not have a blueprint, no optimal structure we are working towards.”

Liberum Capital equity research analyst Peter Atherton tweeted that this was “opening the door on water mergers”.