Energy, water and telecoms regulators agree action plan in areas where consumers need most support

The UK’s energy, water and telecoms regulators have agreed a new action plan to ensure consumers are being treated fairly amid the cost of living crisis.

With wholesale energy prices and other input costs beginning to come down, Chancellor Jeremy Hunt said he wanted to make sure consumers benefit from these reduced costs. During the current period of high inflation and interest rates, this also includes ensuring higher interest rates are passed on to savers.

A meeting at number 11 Downing Street included the chief executives of Ofgem, Ofwat and Ofcom, along with the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA).

The FCA is expected to report by the end of July on how the savings market is allowing savers to benefit from higher interest rates. Banks and building societies will be asked to explain the pace and extent of their pass through of interest rates, and how they are proactively supporting savers to switch to high interest rate products.

On Monday, the CMA will publish its review of the road fuel market. It will provide updates on the grocery sector in July, and housebuilding and rented accommodation in August, and also plans to launch work in at least two new areas.

Ofgem will take steps to ensure that all gas and electricity providers are passing falling prices onto consumers and keep the price cap formula under review so that it mirrors the costs facing suppliers.

Ofwat agreed to crack down on water companies that are not going far enough to support customers to pay their bills, access help and repay debts.

And Ofcom will push suppliers that have yet to introduce social tariffs (discount deals for vulnerable customers) to offer them in the broadband and mobile markets, as well as waive fees for customers who want to switch providers to access a social tariff.

The FCA, Ofcom, Ofwat and Ofgem will also publish a joint statement setting out shared expectations on treatment of customers in financial difficulties.

A follow-up meeting with the chancellor is due to be held later in the summer.

Severn Trent unveils takeover approach from Borealis-led group

UK water and waste water treatment firm Severn Trent Plc (LON:SVT) today announced it had been approached with a takeover proposal by a group that includes Canada’s Borealis Infrastructure Management Inc, thus confirming recent press speculation.

Severn Trent said in a statement that Borealis, the Kuwait Investment Office and the UK’s Universities Superannuation Scheme Ltd are considering making an offer to buy the company. The water utility stressed there was no certainty that the consortium would make a firm bid as the approach is at a very early stage.

Earlier, Magazine Financial News quoted two sources as saying that Borealis and the Kuwait Investment Office could propose to pay between £22.50 ($34.44/€26.49) and £23.00 per share, or around £5.3bn in total.

According to Liberum analysts cited by Reuters, it would be risky for the suitors to pay such premium in year three of the five-year regulatory cycle for one of the three remaining public UK water firms.

Possible buyers walk away from a deal to buy RWE’s stake in Suewag

German power and gas utility RWE (AG ETR:RWE) said talks over the sale of its 77.6% in utility unit Suewag to consortium of regional utilities had failed to lead to an agreement, due to differences on pricing, but it remained open to negotiate a deal with interested parties.

Regional utilities EVM and Stadtwerke Frankfurt am Main Holding GmbH, part of the bidding consortium, said in a statement that the group is not planning to continue negotiations with RWE.

RWE’s stake in the utility unit Suewag has been valued at between EUR700m (USD873m) and EUR800m by analysts cited by Reuters.
The German group is still aiming to dispose of up to EUR7bn worth of asset by the end of next year, it said.

It has so far disposed of 19.3% in regional utility VSE in a EUR83m deal and came near to selling its 24.95% in water utility Berlinwasser for EUR618m, Reuters said.

RWE is still planning to shed Suewag, its oil and gas exploration business DEA, Czech gas transmission firm NET4GAS and its stake in regional utility Kevag.

Last week, the company said it would cut 2,400 more jobs, apart from the initially announced 8,000 job cuts.

The utility, along with other German sector players, is striving to cope with the country’s decision to phase out nuclear power by selling assets and reducing costs.

UK water utility Severn Trent seeks buyers its analytical business

British water and sewerage group Severn Trent Plc (LON:SVT) announced on Wednesday it had hired Rothschild to help the company dispose of its analytical services business.

Severn Trent said it decided to sell this operation as it had, over recent months, become a smaller entity with a predominantly commercial-customer focus. Through the sale, the company would also address several commitments it had made to England and Wales’ Water Services Regulation Authority, or Ofwat, with regard to the pricing of certain contracts at the analytical services business. The company did not provide any further details concerning the planned sale process.

Severn Trent Analytical Services, which is the trading name for Severn Trent Laboratories Limited, offers potable, wastewater and contaminated land testing services to British commercial and utility clients. Its business contributes some 1.5% of the group’s overall revenue.

The group itself consists of two main segments, the first of which controls the regulated water utility in Severn Trent Water Limited (STWL). This company delivers water and wastewater services to some 4.2m households and businesses in England and Wales. The other division, namely Severn Trent Services (STS), offers water and wastewater treatment and operating services to utilities, municipalities and commercial clients worldwide.

For the fiscal year to 31 March 2012, Severn Trent booked an underlying profit before interest tax and exceptional items of GBP504.2m (USD785.6m) on a total turnover of nearly GBP1.8bn.