Water firms facing poor performance sanctions

Water firms are to be stopped from paying out dividends to shareholdersiftheyfailtomeet performance standards.

Water regulator Ofwat has been given new powers to block payments to shareholders if a company falls short in supporting customers or the environment.

David Black, chief executive officer of Ofwat, said: "When deciding on dividend payments to investors, water companies need to take stock of their performance for customers, the environment and thecompany'soverallfinancial health. Too often, this has not been the case.

"That is why we're implementing changes that will allow us to better hold companies to account and take enforcement action when they get it wrong."

The regulator said the changes could also "improve the attractiveness of investing in water and wastewater companies".

Government water minister Rebecca Pow said: "It is wrong for water companies to be responsible for environmental damage and poor performance but not face the penalties. It has been happening too often and it needs to stop.Thesenewpowers,made possible through our Environment Act, will enable Ofwat to clamp down on excessive cash pay-outs and make sure companies put customers first."

The Consumer Council for Water also gave its backing to the move.

Senior director of policy, research and campaigns Mike Keil said: "We support these extra protections from Ofwat, which will help to prevent watercompanyinvestorsfrombeing rewarded for failure.

"Customers expect their money to be spent wisely by water companies and protected if things go wrong.”