1st May 2020 08:57
(Alliance News) - UK water regulator Ofwat on Friday laid out measures to "address liquidity challenges" the industry faces as a result of the Covid-19 pandemic.
United Utilities Group PLC, Severn Trent PLC and Pennon Group PLC are among the water companies listed on the London Stock Exchange.
The trio were lower in early dealings on Friday morning in London. United Utilities down 1.6% at 888.00 pence a share, Pennon lost 1.3% at 1,082.28p and Severn Trent was 0.8% lower at 2,371.00p.
"Ofwat has today published its final decisions on how it will intervene to support customers' interests in the business retail market through the current Covid-19 pandemic. Its focus is to protect the interests of customers while ensuring they have access to reliable water and associated retail services now and into the future," the watchdog said.
Water retailers who opted into deferred wholesale arrangements over March and April will pay either 60% of their charges due to wholesalers or 94% of the cash they pocket from their own customers, whichever of the two numbers are higher.
"Retailers should receive liquidity support to the end of July 2020, where required, and all deferred wholesale charges should be paid back in full by the end of March 2021," Ofwat said.
"Wholesalers will be able to charge interest on deferred payments, including to incentivise Retailers to use other sources of liquidity, including government finance, where they can. Ofwat has decided to set a maximum interest rate of 5.98% nominal".
The regulator said it will also monitor the level of "additional Covid-19 related bad debt" in the retail market.
Should the level exceed a 2% threshold, the watchdog will "provide regulatory protections".
Severn Trent meanwhile, announced a change of its own. Sharmila Nebhrajani joins the company as a non-executive director, effective Friday.
"Her previous executive roles include chief executive of the Association of Medical Research Charities and chief operating officer at BBC Future Media & Technology, where she managed the business functions of bbc.co.uk, including the launch of iPlayer," Severn Trent said.
By Eric Cunha; [email protected]
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