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U.K.: Competition Commission may hear conflict between water cos, regulator

By  |  November 26, 2012

U.K. water companies have raised concerns over changes to the companies’ licenses proposed by its regulator Ofwat, and experts say the conflict may lead to a review by the Competition Commission. Most of the 19 companies have voiced opposition to the proposed changes, which would reorganize how the companies’ revenues are regulated. At present, the revenues are regulated in five-year sections; the companies say this makes them “attractive to investors” as it allows for stable returns. Ofwat, however, would remove parts of the businesses (reports say up to 40 pc of revenues) from the revenue regulation from 2020, and the water companies say this will create uncertainty in foreseeing the level of returns. The companies also argue that the changes would raise consumer prices and the cost of capital due to a loss of investor confidence. Last month Ofwat announced that the issue would go to the Competition Commission if any of the water companies did not agree to the proposed changes.

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