Water UK EventsCity Conference 2013

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Water UK held its 13th annual City Conference yesterday with 180 senior water industry professionals and stakeholders in attendance.

The high-quality programme provided a complete review of the current industry challenges and its future direction with perspectives from Water UK Chief Executive, Pamela Taylor; Government Minister Richard Benyon; Ratings Analyst, Neil Griffiths-Lambeth from Moody's; Scottish Water Regulator, Alan Sutherland; and Yorkshire Water CEO, Richard Flint. These speeches preceded contributions on the implications to financing from leading city investors and analysts. There was plenty of time for discussion and debate with panels led by company CEOs, plus a seated lunch which provided invaluable networking time.

One of the recurring references of the day was the industry's gold standard regulatory model. With the current uncertainty about future change, alongside the turbulent economic climate, this gold standard could be at risk. Pamela Taylor focused her speech on the importance of sustaining investor confidence. It was recognised that, looking ahead, finance should continue to be available, but funding, i.e. the customer's ability and willingness to pay, is not guaranteed. The industry relies on stability, legitimacy and affordability - investor confidence is vital to ensuring these.

The disparity between incentives and penalties was underlined by both industry and investors. There is a real need to incentivise businesses beyond penalties for poor performance. Investors look at the whole package to establish returns, recognising a good management team which is innovative and forwarding looking. This balance between incentives and penalties is key to ensuring the sector is attractive to investors.

Many speakers called for a measured pace of change and the Government reassured the industry that this would be the case. In response to this and recent concerns about the Draft Bill, Richard Benyon spoke of a framework so government sets the direction and pace of reform but is not overly prescriptive. He went on to say that the fundamental case for reform remains compelling, highlighting that competition will drive efficiency, innovation and affordability. But he recognised that badly designed reforms create risk which turns investors away. Notably, he stated that upstream changes would not be implemented until after 2019.

Overall, the industry needs to work together with its stakeholders to keep the gold standard and retain investor confidence. We need to look beyond the current turbulent times and adapt to our changing world. As Richard Flint stated it is not just about regulation and legislation, the industry has delivered much already and "we have the energy, flexibility and capacity to address the three challenges of population growth, affordability and climate change."

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