Source · Select Committees · Public Accounts Committee
Recommendation 23
23
Acknowledged
Water companies face challenges raising new equity despite increased investor returns
Conclusion
First Economics told us that financial resilience depends on having confidence that financial markets will supply water companies with new debt and equity.73 Ofwat estimates companies will need around £12 billion in new equity over the next five years to support their spending plans.74 Ofwat told us that companies had raised £5 billion in equity over the last five years. It also acknowledged that some companies are facing challenges in raising investment.75 Both equity and debt investors require a return for their investment allowing for the risk associated with the investment. Ofwat has also increased the level of returns for investors over the next five years which is covered by customer bills.76 The Consumer Council for Water told us that a low-risk, low-return environment was needed, and First Economics confirmed that this would be one way to bring bills down.77
Government Response Summary
The government recognises that financial resilience depends on confidence in financial markets, is committed to creating a stable regulatory environment, and is working with Ofwat to ensure water companies are financially resilient.
Government Response
Acknowledged
HM Government
Acknowledged
The Government recognises that financial resilience depends on having confidence that financial markets will supply water companies with new debt and equity. The Government is committed to creating a stable and predictable regulatory environment that encourages investment in the water sector. The Government is working with Ofwat to ensure that water companies are financially resilient and able to attract the investment they need to deliver the infrastructure and services that customers need.