Local MP Alan Mak MP has written to Ofwat, the water company regulator, to call for a change in regulations to ensure water company dividend policies are linked to their performance for customers and the environment.
Southern Water have not paid external dividends to its shareholders since 2017. However, Alan Mak has stated they should not consider doing so unless they can show measurable improvements to their environmental performance.
Currently water companies are only allowed to pay a dividend if doing so does not impair the company's ability to finance its activities. They must also publish information explaining how their dividend payments and policies take account of delivery for customers. Despite this, in recent reporting to Ofwat, many companies did not meet their expectations in explaining their dividend payments and/or policies.
Alan Mak has called on Ofwat to strengthen the link between paying dividends and improved environmental performance. He believes water companies should not be paying a single penny in dividends until they have tackled pollution, cut leakage, and secured a steady supply of clean and plentiful water. The proposal is crucial to ensure better accountability on performance, and drive the outcomes that we all expect from our water company.
Alan Mak MP said: “Local residents have been clear that they expect better from Southern Water. They must tackle and reduce discharges and improve their service to customers. This should be a precondition before they start rewarding their shareholders with dividends. I have written to Ofwat asking them to link dividend payments to environmental performance and protection.”
