Water shares rally but Byatt price curbs set to prompt appeals

WATER COMPANY shares rallied yesterday as the industry regulator, Ian Byatt, unveiled a less punitive set of price curbs than had been feared.

But industry leaders said they still expected a number of suppliers to appeal to the Competition Commission in protest at the reductions in domestic bills and increased environmental spending they face.

Water UK, the industry group, described the pounds 1.2bn package of price cuts and environmental improvements announced by Mr Byatt as "a tough settlement all round", saying he had given with one hand but taken away with the other.

"Profits will fall, borrowings will spiral and the industry's cash negative position will simply get worse," said Water UK's chief executive Pamela Taylor.

"Those companies who decide it will not be possible to deliver the programmes needed to meet their obligations will have no choice other than to lodge appeals with the Competition Commission."

Companies have two months to decide whether to accept Mr Byatt's final price determinations or to opt for a six month hearing before the commission.

The price curbs will reduce average household bills by pounds 30 next year - a reduction of 12 per cent. In his draft proposals in July, Mr Byatt recommended a 14 per cent cut in charges.

The change is the result of a pounds 700m increase in the industry's bill for environmental and drinking-water quality improvements over the next five years to pounds 9.4bn. Total expenditure, including maintenance, will reach pounds 15.4bn.

Mr Byatt described the package as "fair, achievable and realistic". Other than the extra leeway on bills he has given some suppliers - particularly those with long coastlines, there are no changes from his July proposals. The industry's post-tax return on capital remains at 4.75 per cent while it will still have to achieve a 16 per cent efficiency gain over the five year period to March 2005.

Shares in Thames, United Utilities, the owner of North West Water, and Anglian and Kelda, the owner of Yorkshire Water, rose by 4-6 per cent.

But Severn Trent shares fell as did shares in Hyder, the owner of Welsh Water, despite a reduction in the amount by which it will have to cut bills from 14 per cent to 10.5 per cent. Hyder is seen as the company most likely to appeal.

The average annual reduction in bills over the five-year period will be 2 per cent compared with a figure of 2.7 per cent proposed in July. This reflects the decision by Mr Byatt to allow some companies such as North West to raise prices by a greater amount in the past two years of the period to fund their environmental obligations.

Sport
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
News
Detail of the dress made entirely of loom bands
news
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
techResearchers recover 100s of nude photos from second-hand smartphones
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
Sport
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Account Management Strategy Manager

£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice