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Regulator Ofwat has urged the holding companies of water firms to be more transparent on their governance structures.
In guidelines published on Friday, Ofwat said the principles of transparency, managing risk and supporting long-term decision-making should guide the governance arrangements of the holding companies of the water companies in England and Wales.
Draft principles for holding companies were published in January 2014 but Ofwat said few responses from water companies meant it had made “limited changes”.
According to the guidelines, the holding company structure should be transparent, and explained in a way that is “clear and simple to understand”.
In addition, Ofwat expects the regulated business to be protected from risks in other parts of the group, “so that the customers of the regulated company are not subject to service or cost issues as a result of activities elsewhere in the group”.
Holding companies should also support the regulated company in operating in a sustainable way “in line with the long-term nature of the water sector”, Ofwat added.
Ofwat has recommended that holding companies adopt these principles voluntarily.
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