Pennon agrees to lower water bills

18th Jan 2010 07:40

Water company Pennon has accepted Ofwat's final determination on how much it can charge customers over the next five years.The South West Water owner has decided not to refer Ofwat's price determination for 2010-2015 to the Competition Commission and also promised real dividend growth over the five year duration of the regime.In November Ofwat diluted previous proposals calling for sharp reductions in water bills.Ofwat said average annual bills will have to fall by £3 to £340 between 2010 and 2015. However, the price cuts proposed by Ofwat are less favourable to customers than the £14 a year price cut to £330 suggested in July.The regulator called on South West Water to implement a £1 cut in bills in real terms by 2015."The Pennon board has considered South West Water's decision to accept the determination and also considered (waste arm) Viridor's prospects over the coming years' Pennon said today.. 'Viridor's successful strategy to create long-term sustainable profit growth is expected to continue through capitalising on its leading position in landfill waste disposal.'On this basis the board is today announcing its intention to continue a progressive policy of growing the group dividend in real terms, at least up to 2014/15.'.Reports over the weekend suggested United Utilities will also reluctantly agree to its price determination and embark on cost-cutting drive that could see it shed up to 20% of its workforce. Brokers have suggested it may have to cut its dividend to meet Ofwat's targets.Of the 21 water and sewage companies operating in England and Wales, 16 are still to say whether they will appeal to the Competition Commission.