United Utilities Group PLC has announced that after careful consideration, its principal subsidiary, United Utilities Water, has accepted Ofwat’s final determination for the water company’s upcoming AMP7 investment programme.

Steve Mogford, Chief Executive Officer, said:

“We were pleased last year to have been awarded fast-track status reflecting the high quality of our business plan. Our plan provides further service improvements for customers, lower bills, continuing high levels of investment to future proof the region’s water infrastructure and maintains our responsible approach to financing. This includes having a fully funded pension scheme on a self-sufficiency basis and being the first water company in the FTSE 100 to secure the Fair Tax Mark.

“We have a long track record of sharing outperformance with customers as well as the widest range of payment solutions and affordability schemes in the sector. The final determination delivers the third successive five year period in which customer bills have reduced in real terms.”

United Utilities’ plan for AMP7 was fast-tracked through the 2019 price review process.

Average bills for UUW customers have fallen in real terms over the 10 years from 2010 to 2020 - delivery of the final determination will see average bills fall further in real terms for another five years to 2025.

The company said that sustainable improvements in performance achieved in recent years and the plans in place for AMP7 gave it confidence that it can further improve services for customers and provide an appropriate return for investors.

Over the last ten years, UU’s gearing, measured as group net debt to regulatory capital value (RCV), has remained stable and “always comfortably” within its target range of 55 to 65 percent. “We believe that it is appropriate to retain this target gearing range over AMP7 in order to maintain efficient access to debt capital markets throughout the economic cycle.”

In line with UUG’s existing dividend policy for 2015-20 (AMP6), the total dividend per ordinary share for 2019/20 is expected to be 42.60 pence.

With respect to its AMP7 dividend policy, the UUG board has announced that the group will target growing its dividend per share by CPIH inflation each year from 2019/20 through to 2024/25.

The utility has a long track record of sharing outperformance with customers exemplified by the additional investment in excess of £600 million in total ccross the period AMPs 5 and 6 2010-20 The balance of outperformance after sharing with customers has been retained by the group and is available for distribution.

United Utilties said that while the PR19 final determination is challenging, the group is entering the new regulatory period in a financially robust position.