Investor confidence that Ofwat is independent of Government has fallen during the past year - according to the results of the water sector regulator’s annual investor survey, perceptions of Ofwat's independence saw the most significant fall with only 48% agreeing compared with 55% in 2021.
Investor confidence that Ofwat is independent of Government has fallen during the past year - according to the results of the water sector regulator’s annual investor survey, perceptions of Ofwat's independence saw the most significant fall with only 48% agreeing compared with 55% in 2021.
Image source: Ofwat investor survey results 2022
Confidence also fell that Ofwat regulates in a proportionate, consistent, transparent and targeted way – with only 58% agreeing/ strongly agreeing, compared with 68% in 2021.
The annual investor survey was open from 16 December through to 20 January – the previous survey was published in March 2022. Ofwat sent the survey via its investor relations distribution list to 479 investors and received 52 responses – an 11% response rate (the prior year response rate was 7%).
The survey consisted of the following seven set questions which investors were asked to rank on a scale of five responses – strongly agree or agree, neither, disagree or strongly disagree:
1. Ofwat’s regulatory framework aligns the interests of regulated companies and their investors with those of customers over the long term.
2. Ofwat regulates in a proportionate, consistent, transparent and targeted way, choosing the most appropriate tools from within a wide range of regulatory responses.
3. Ofwat is independent of government(s).
4. Ofwat’s policies are well-considered and consistent.
5. Ofwat is listening to investors.
6. Ofwat engages with the investor and credit-rating communities in an open and transparent way.
7. Ofwat engages consistently and sufficiently with all types of investment stakeholder (debt, equity and analysts).
Ofwat has surveyed investors to assess their understanding and views of its regulatory framework since 2016.
At the previous survey published in March 2022 Ofwat received 34 responses – a 7% response rate. In May 2021 the response rate was 13% ( 61 responses) and in March 2020 the rate was 16% (74 responses)
Results by investor type
The survey shows the responses for the largest three investor types – equity investors in privately owned assets, debt investors and equity investors in listed assets.
Responses to the questions vary significantly across the three investor groupings.
For equity investors in listed assets the percentage of strongly agree or agree across the seven set questions ranged from 43% to 76% while the same range for equity investors in privately owned assets was 9% to 45%. For debt investors the percentage of strongly agree or agree across the seven set questions ranged from 53% to 87%
The survey also includes comments from 24 respondents who provided the regulator with written feedback. Ofwat was commended for its timely emails and responses to queries, regular roundtables, conference calls and participation in investor conferences. The report also says:
“You understand what investors are interested in – helpful email summaries of publications and developments relevant to investors.”
However, in contrast, a critical comment on what Ofwat could improve on in terms of engagement and access to information over the coming year states:
“Clearer summaries in your publications – many of your reports tend to be very detailed and difficult to digest.”
Click here to download Ofwat Annual Investor Survey Summary 2022
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