Pennon, Severn Trent and UU's dividends could see crackdown under new Ofwat plan – report

Water company dividends could be cut by the regulator in future if environmental performance does not improve, according to a proposed plan.

Regulator Ofwat wants the government to give it the power to turn down the tap on the billions of pounds that the likes of Pennon Group PLC (LSE:PNN, OTC:PEGRY)Severn Trent PLC (LSE:SVT)United Utilities Group PLC (LSE:UU.) and the six other water companies have paid out in dividends since privatisation. 

One of the elements of Ofwat’s industry review includes proposed controls to limit excessive dividends, the i paper reported.

The level of untreated sewage released into rivers and oceason by the industry has come under extra public scrutiny in the past couple of years, led by unlikely campaigners such as former Undertone lead singer Feargal Sharkey, and ramped up by a new BBC documentary, ‘Our Troubled Rivers’, released this month and presented by another keen celebrity angler, Paul Whitehouse. 

The water authority has also become more concerned about debts built up by water companies and the proportion of cash being used to pay interest, dividends to shareholders and improvements to waterworks and sewers.