Water companies United Utilities and South West Water have said they will raise dividends to shareholders as they confirmed consumer bill increases of 32% and 23%, respectively, over the coming five years.
United Utilities, which serves about seven million customers around Manchester and Liverpool, and South West Water’s parent company Pennon said they had agreed the bill increases negotiated with regulator Ofwat last year.
The regulator’s decision, made in December, means the typical billpayer across the UK will see their payments rise by an average of £86 this April and was met with outrage from consumer groups.
The increases come amid high levels of sewage spills and underinvestment in pipes, sewers and reservoirs over the last decade.
The companies have said they need to increase bills to pay for improvements to their infrastructure to reduce pollution incidents.
Despite this, United Utilities and Pennon also said they will raise dividend payouts to shareholders this year so that they increase in line with inflation.
United Utilities’ boss Louise Beardmore said the rise in bills would raise £13 billion to invest in its infrastructure across the North West.
She said the total was the “largest investment in water and wastewater infrastructure in over 100 years”.
Pennon, meanwhile, whose companies serve about 1.8 million customers, said it will tap investors for £490 million via a sale of new shares.
It said the money will go towards a £3.2 billion investment in its pipes and sewers over the coming years.
The group’s chief executive Susan Davy said the company has “listened to customers” and that the bill rises would pay for “record levels of investment”.
She said the money would go towards “fixing storm overflows, building new reservoirs and creating natural habitats for wildlife”.
The smaller SES Water, which Pennon also bought last year and serves Surrey, Sussex and Kent, will reduce bills by 3% over the five-year period.
The companies had the option of appealing Ofwat’s decision on bills to the competition regulator, but the announcements on Wednesday signal they will not.
This article was written by Alex Daniel from The Independent and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.