Ofwat has published the Monitoring Financial Resilience (MFR) report 2022-23, which aims “to promote a focus on efficient investment that secures long-term resilience and delivers long-term value for money for customers and the environment”.

According to the report, the water sector has attracted £4.6bn in additional money from shareholders since 2020, helping to improve the financial resilience of water companies and help fund increased investment for the 2024 price review.

£1.4bn of that equity has come in the previous year, with Thames securing £500m, Yorkshire Water £400m, Southern Water £375m, Portsmouth Water £120m and SES Water £7m. This is additional money that has been put into the business from shareholders, not customers.  This trend has continued a Severn Trent has recently announced a further £1 billion to finance its investment programme.

The MFR report sets out Ofwat’s ongoing approach to company financial monitoring and engagement. It places water companies into three distinct categories: standard, elevated concern or action required.

This year’s report, which covers the financial year of 2022-23, sees eight companies categorised as standard, four marked as elevated concern and four companies as requiring action. Where companies find themselves in a category of higher concern, Ofwat expects companies to take action to address their financial resilience. Companies in this category are subject to a range of regulatory actions, which include increased regulatory challenge, scrutiny and monitoring and an expectation that actions are put in place to improve financial resilience. In some instances, this requires companies to action a turnaround plan.

Download the report here.