Water groups warn the regulator on price limits

WATER companies are set to cut dividend payments and thousands of jobs if Ofwat goes ahead with planned price restrictions this Thursday, they warned yesterday.<br /><br />Regina Finn, chief executive of Ofwat, has come under political pressure to keep prices down for customers but equally this weekend there were signs there could be some sort of compromise that would suit&nbsp; industry interests too.<br /><br />&ldquo;There may be changes from the draft proposals,&rdquo; said an Ofwat spokesperson yesterday.<br /><br />The industry is adamant that it needs to raise prices.<br /><br />&ldquo;We need to replace pipes, 40 per cent of which are over 100 years old,&rdquo; one industry source said. &ldquo;There is a backlog of capital investment. The pipe replacement process should have started in the 1950s, slowing down the process makes no sense.&rdquo;&nbsp;&nbsp; <br /><br />As a result of the regulator&rsquo;s imminent decisions, utility companies are looking to shore up their cash positions and some may be forced to cut dividend payments for up to five years. Pension funds, the largest investors in utility companies, are likely to be the worst hit by this policy.