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United Utilities’ average household bills will fall by 2.3 per cent in real terms over the 2015-20 price cycle, a further drop of 0.6 per cent from its original business plan for the period.
This reflects the lower cost of capital proposed by the regulator and accepted by United Utilities in its new plan, submitted today. Its proposed vanilla WACC (weighted average cost of capital) has fallen from 4.1 per cent to 3.7 per cent, in line with Ofwat’s guidance.
United Utilities’ proposed expenditure of £6.6bn, including capex of £3.75bn, is broadly in line with its initial plan. The company said it has provided comprehensive further evidence of its proposed adjustments, including a retail household cost to serve adjustment of £19m a year due to high levels of deprivation in its area.
It also said its outcome delivery incentives now include rewards as well as penalties.
Ofwat will issue its final determinations for the 2015-20 period on 29 August.
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