A number of investors are unhappy with certain aspects of the way that Ofwat is working, according to the results of the water sector regulator’s latest annual investors survey for 2019.
Image source: Ofwat
The results set out the percentage of investors who either disagree/ strongly disagree with seven set questions, including:
- Ofwat's regulatory framework aligns the interests of regulated companies and their investors with those of customers over the long term - 33%
- Ofwat regulates in a proportionate, consistent, transparent and targeted way and chooses the most appropriate tools – 39%
- Ofwat is independent of government – 41%
- Ofwat's policies are well-considered and consistent – 29%
- Ofwat is listening to investors – 41%
Compared with 2017, the number of investors who agree that Ofwat is independent of government has fallen from 71% to 59%, with the number who agree that the regulator’s policies are well-considered and consistent dropping from 74% to 63%. The number who agree that Ofwat engages consistently and sufficiently with all types of investment stakeholder (debt, equity and analysts) has also decreased from 78% to 71%.
However, the number of investors who believe the regulatory framework aligns the interests of regulated companies and their investors with those of customers over the long term has remained relatively steady – 66% in 2019 compared with 68% in 2017.
The results have also been analysed by the largest three investor types - equity investors in privately owned assets, debt investors and equity investors in listed assets.
Responses to Ofwat’s seven set questions vary significantly across the three investor groupings, according to the regulator. Private equity investors uniformly disagreed with all seven statements. In contrast, no investors in listed assets either disagreed or strongly disagreed that Ofwat's policies are well-considered and consistent or that Ofwat is independent of government.
Out of 459 investors surveyed, Ofwat received a total of 74 responses – a 16% response rate (13% - 2018), with 47 providing written feed back. Key areas Ofwat has highlighted where investors have suggested areas for improvement on engagement over the next year include:
- Access to information – making water company operational performance data more accessible
- Strategy - working more collaboratively with water companies. It would also be good for Ofwat to demonstrate and track the impact its regulatory framework is having on customer outcomes.
Ofwat is planning to increase its engagement with the industry, getting out and about more so that “we can see for ourselves the work that water companies are doing and learn from this and other sectors.”
Concluding the analysis, the regulator said:
“We would like to see a reset with fewer detailed rules and where co-operation in solving strategic challenges is the norm. With commitment, action and energy, the water industry can rebuild the legitimacy that has been lost in recent years.”
Click here to download Ofwat annual investor survey 2019 - Summary of results
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