Ofwat seeks greater transparency on shareholder returns

In a further effort to boost transparency of sector finances, Ofwat has proposed requiring water companies to disclose more detail on shareholder returns and to explain the difference between the money received from customers each year and network investment.

The proposals are some of the changes the regulator has suggested to its Regulatory Accounting Guidelines, which set out in detail how water companies must treat particular items where disclosure and reporting requirements go further than those normally required under company law.

Companies must use these guidelines to complete their annual performance report, which is in turn used by Ofwat and other stakeholders to allow easy comparison of each company’s performance.

Ofwat has published a consultation, which runs until 22 February, on regulatory reporting in the 2018-19 financial year. This covers:

• reporting requirements for 2018-19, in particular taking into account recent reporting issues, new information requirements for financial flows and for costs and revenues associated with new connections, and

• potential new requirements for 2019-20 onwards.

Ofwat said it intends to publish the finalised RAGs in April 2019 which will be effective for the 2018-19 reporting year.