Ofwat seeks industry-wide cash lock-up consent
Ofwat is seeking all 17 statutory water companies’ consent to bring the ring fencing provisions in their licences up to the industry-leading standard – in particular to restrict payouts to shareholders if the company is in financial distress.
The regulator is consulting until 25 June (with a view to implement on 23 July) on final proposals, following extensive earlier consultations. While many companies have already indicated consent, Ofwat wants to bring all companies in line to ensure that the interests of customers across England and Wales would be protected in the same way.
One of the key changes would mean all companies would have ‘cash lock-up’ provisions which state that if a water company loses its investment credit grade rating, it is barred from making pay-outs to shareholders or removing money or assets from the business.
Chief executive of Ofwat, Rachel Fletcher (pictured), said: “Today, perhaps more than ever, we need to do all we can to look after customers’ interests and put arrangements in place to promote water companies’ financial resilience. Part of that means making sure that if a water company is facing financial difficulties, customers do not suffer. We have consulted extensively on these measures and are now looking to companies to agree to this greater protection for their customers.”