United Utilities has become the second water company to accept Ofwat’s final determinations on its business plan for the next five years.
As with Severn Trent, which also announced its acceptance this week, United Utilities was fast-tracked through the price control process. However, the final determination revealed an increase in the level of bill reductions the company must achieve by 2025, while the totex allowance was still £146.7 million lower than the company had originally requested.
Chief executive Steve Mogford said: “We were pleased last year to have been awarded fast-track status reflecting the high quality of our business plan. Our plan provides further service improvements for customers, lower bills, continuing high levels of investment to future proof the region’s water infrastructure and maintains our responsible approach to financing. This includes having a fully funded pension scheme on a self-sufficiency basis and being the first water company in the FTSE 100 to secure the Fair Tax Mark.
“We have a long track record of sharing outperformance with customers as well as the widest range of payment solutions and affordability schemes in the sector. The final determination delivers the third successive five year period in which customer bills have reduced in real terms.”
In an update to the stock exchange this morning, the company also reported on its dividend policy.
As per Ofwat’s guidance, the group will target dividend growth in line with CPIH rather than RPI. The policy starts from a base of 42.6p in 2019/20, compared to 41.3p last year.