Pennon jumps as South West Water accepts Ofwat guidance
PENNON’S share price jumped yesterday, after its water company subsidiary South West Water agreed to regulator Ofwat’s guidance in order to fast-track its business plan for the next five years.
Morgan Stanley-backed Affinity Water, which supplies water to parts of central England, Essex and Greater London, also accepted the risk and reward guidance.
Ofwat had put pressure on water companies to accept a lower rate of return on investment during the 2015 to 2020 price cycle and picked only two firms to be fast-tracked, with the rest facing further scrutiny.
“Both companies produced business plans of consistently high quality, which clearly reflected their customers’ views,” said Ofwat.
“On 4 April, we will announce our decision as to whether the companies will be enhanced and go through a fast-track process.”
Pennon shares closed up 0.9 per cent at 772.5p yesterday.