OFWAT should regulate “Profit-Shunting” – MP
North Cornwall’s MP, Dan Rogerson, has called for OFWAT to monitor water firms’ ability to transfer profits to other companies within the same group.
South West Water, for example, is presently able to transfer funds to its parent company, Pennon Group Plc, which could allow it to support less profitable firms using billpayers’ cash. The arrangements were set up in the late 1980s following Conservative privatisation of the industry.
Speaking in the House of Commons, the local Liberal Democrat MP said the price setting process should monitor not just “dividends for shareholders but…how funds are moved around within groups”.
Commenting afterwards, he said:
“Profit-shunting could mean billpayers meet the cost of other flailing enterprises that are in the same parent company as their local water firm.
“Since Cornwall pays the highest bills in the country, the very least we’re owed is transparency about where our money is going.
“The easiest way to get clarity for everyone is to bring this within Ofwat’s remit, so they can monitor what the water companies do and ensure people are treated fairly.”
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