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Ofwat chair Jonson Cox has warned the water industry it could face further condemnation from politicians and the public for making “unearned profits” as a result of low interest rates.
The comments come a month after MPs slammed the regulator for allegedly allowing the companies to make ‘excess profits’.
Speaking at an Ofwat event in London on Thursday, Cox said: “We squeaked through one affordability crisis in 2013 thanks to some very proactive action, with support of the companies.
“I am really conscious we’re going into another period of outperformance. Interest rates, everyone told me in PR14, were on the floor. Well, the floor has just lowered in the corporate debt markets.”
He added: “We need to remember that we will all have a choice on how we navigate the legitimacy of companies in the sector through challenges coming from what the public see as unearned profits.”
Cox hinted that actions similar to those taken at the end of the last AMP cycle, when Ofwat encouraged companies to keep price rises down, are likely during AMP6 in order to retain the trust and confidence of customers.
“It’s a discussion we’re going to have to face I suspect. It’s not an easy one, but it’s got to be done,” he said.
“We maintain legitimacy by doing the right thing.”
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