Pennon rises on Ofwat approval
FTSE 250-LISTED Pennon soared three per cent in early trading yesterday, after the regulator Ofwat said that its water company subsidiary South West Water had qualified for enhanced status and a fast-tracked price review.
Affinity Water, which supplies water to parts of central England, Essex and Greater London, also qualified, but FTSE 100-listed Severn Trent and United Utilities did not.
Those firms can still have their business plans approved but can also submit new evidence to Ofwat by May to accelerate their 2015 to 2020 price review.
South West Water and Affinity Water now have until 17 March to accept Ofwat’s risk and reward guidance, issued on 27 January, which will enable them to be fast-tracked. Ofwat has put pressure on water companies to accept a lower rate of return on investment during the next price cycle.
“We await further feedback from Ofwat,” said Severn Trent. Pennon and United Utilities did not comment.
Shares closed 2.17 per cent higher.