UK water industry regulator on Monday said it will grant a temporary increase in the price cap for the business retail market, to allow retailers offset some of the bad debt costs caused by the Covid-19 pandemic.
Ofwat will grant an increase of 0.49% in the price cap for business customers. This is bigger than the 0.31% increase that was put out for consultation back in December.
The raised price cap will take effect from April 1 and run for two years. The change affects sales of water and wastewater services to businesses in the UK and doesn’t apply to household customers.
‘During the pandemic, we have implemented measures to continue to protect the interests of business customers,’ said Georgina Mills, Business Retail Market director at Ofwat. ‘Implementing this small and temporary upward adjustment to the business retail price caps aims to protect business customers, including by maintaining strong incentives on retailers to keep bad debt costs as low as possible.’
Among water utility shares in London on Monday afternoon, Severn Trent PLC was up 1.2%, United Utilities Group PLC up 0.8%, and Pennon Group PLC up 1.1%. The wider FTSE 100 and FTSE 250 indices were down 1.5% and 0.3%, respectively.
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