Water Stocks Rise in London as Regulator Proposes a 3.85% Return

Jan 27, 2014 12:19 pm ET

Jan. 27 (Bloomberg) -- The two largest publicly traded U.K. water companies were the leading gainers on the Stoxx 600 Utilities Index today after the Ofwat water regulator proposed an allowed return for the next review period of 3.85 percent.

United Utilities Group Plc climbed 1.9 percent to close at 713.50 pence in London as Severn Trent Plc rose 1.3 percent to 1,700 pence. Pennon Group Plc was almost unchanged at 678 pence after Ofwat proposed regulated returns for the 2015-2020 period lower than that sought by water companies.

Announcement of final results for allowed wholesale water revenue by April 4 “is likely to be nearer the regulators’ figure,” Bloomberg Industries analyst Chris Rogers wrote. Higher U.K. rates had been rejected by Ofwat as excessive, with Chief Regulation Officer Sonia Brown saying Nov. 13 that water companies should be looking for a number “to start with a 3.”