3 ms·
What you said about the water companies is not correct. They are regulated on the basis of price - the regulator sets a pricing formula for the industry RPI +
by james1071 8y ago
What you said about the water companies is not correct.
They are regulated on the basis of price - the regulator sets a pricing formula for the industry RPI + X (i.e. X is the annual price increase above inflation).
There are no caps on profit.
The reason why companies carry large amounts of debt is that debt finance is much cheaper than equity. Given that a utility has stable cashflows, it makes sense for it to use a high proportion of debt finance.
- ownagefool 8y agoFair enough, I defer to somebody who obviously knows more. I admit I likely conflated several industries anyway ( I believe rail is on a 4% cap). However, there still seems to be questions around the debt, divididends, and asking Government for investment. https://www.bbc.co.uk/news/business-41152516 https://www.bbc.co.uk/news/business-41152516 https://www.theguardian.com/commentisfree/2013/aug/03/water-industry-exploitation-pollution https://www.theguardian.com/commentisfree/2013/aug/03/water-... https://www.ft.com/content/5878de66-9c7d-11e7-8cd4-932067fbf946 https://www.ft.com/content/5878de66-9c7d-11e7-8cd4-932067fbf... Now obviously we live in a country of outrage, and fairly poor reporting, but the reporting does make it seem like we regularly get privatised profits and socialised losses.