The CMA has today published its findings on the price controls for 4 water companies for 2020-2025. This follows an appeal by Anglian, Bristol, Northumbrian and Yorkshire following Ofwat's determination in December 2019.

The CMA notes that the return to investors will be 32% lower than the last price control period, 9% lower than the Group’s provisional findings and approximately 12% lower than the rate proposed by the water companies. However, it is important to note that the return is still significantly above that proposed by Ofwat. 

For example, the CMA's wholesale WACC is 2.2% compared to the 1.9% proposed by Ofwat and there have been increases in allowable costs (c2-4% above Ofwat's proposals).  This has led to an increase in allowable revenue for the appellants into the hundreds of millions of pounds over the period.

The water companies that decided not to appeal Ofwat's determination may well find themselves questioning that decision today as they will not be able to benefit from the increased revenue afforded to those that did appeal. 

Other economic regulators will also be reviewing CMA's decision and may take a more cautious approach to their own price control determinations.