Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
" Customers are helping to pay for a £25bn programme to improve the water supply.
Since the industry was privatised in 1989, water companies have spent £108bn on upgrade work."
"Thames Water spokesman Simon Evans told Sky News: "What we spend on the system for our customers dwarfs the amount we pay out to shareholders."
http://uk.news.yahoo.com/average-household-water-bill-rise-3-5-070310676--finance.html
Might there be some "vast eternal plan" that allows for the incessant carping about Government spending
our hard earned money. When, with water companies, we are to rejoice when the same happens?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
No-one else is going to pay for it.
Ultimately we all pay for everything in one way or another.
Strange that some people seem to think that there is some mysterious pool of money somewhere. It is all our money.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
If the customer is to pay, what can they expect in return?
Where is the dividend for those who stump-up?
Privatised utilities are simply privatised taxation. Far better to return the investment of the shareholders and re-nationalise the utilities. If pension funds wish a return for their investment there should be some risk, should there not?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 725- Registered: 7 Oct 2011
- Posts: 1,418
The trouble is that privatizing has led to the invention of a perfect synergy of politicians, corporates and other leeches fleecing Joe and Jane Bloggs.
Take Lord Deben as an example. Remember him? The toady who was more than willing to sacrifice the health of his daughter to prove a political point.
Anyhow this chump works for Violia water.Convenient eh? A placeman for the company occupying the higher levels of government.
That's how the free market works.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Customers pay all the time. Everything come from customers, as I said there is no free pot of money available to anyone, not from business, not from government. Even QE - what used to be called printing money, is not free, we will all pay for it through lower pension income, lower savings interest and higher inflation.
What the customer gets in return is a water supply in this instance of course.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
There does seem to be a free pot of money, the pockets of the water customers are thought to be bottomless. Why don't these pension funds settle for what comes out of the tap?
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Keith Sansum1
- Location: london
- Registered: 25 Aug 2010
- Posts: 23,942
post 6
you have hit the nail on the head
ALL POSTS ARE MY OWN PERSONAL VIEWS
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Tom - the pension trustees have a duty to their members to get a return while the utility companies need to attract investment as well. Such 'boring' equities need to attract that investment by offering dividends as they are not regarded as a 'growth stock'. This is also all the more important for them because they are restricted in the amount they are allowed to 'gear' in other words borrow by OFWAT, their regulator. The regulator does this to reduce the risk to water customers. Dividends are therefore the main weapon they have to raise the capital they need to develop the infrastructure.
They are however trying to find other ways to bridge the 'capital gap'. I discussed this very thing a few weeks ago in the City with a top institutional bond manager. He told me that one utility company has tried to get around this by setting up a holding company to issue bonds direct to the general public. It looks as if it is actually the regulated utility raising the money, but it isn't. The people who buy those bonds consequently are taking on greater default risk than they perhaps realise and yet these bonds are paying a lower yield than the bonds issued by the regulated utility available to the institutions offering less risk. A lesson there I think for anyone thinking of buying direct into bonds.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
Barry, the costs to the consumer go up to provide investment...yet they see no return for their money.
What risk is there to water consumers? I like the idea of issuing bonds to the general public, far better though to assign shares to the customer in return for their investment.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
Tom - These firms need to invest in infrastructure, full stop. It is needed to deliver water services to the public. Capital is raised in a number of ways, from investors, from issuing bonds or from borrowing from banks. Some capital investment can come from profit as well though profit also needs to feed dividends to attract equity investors. There is a multiplier effect in the latter. These shares or rather the asset value they represent, is a level of security that enables the issuance of the bonds in the first place at decent rates. While the profits represents the ability to service the bonds before payment of dividends out of profits. All of this is therefore inter related.
There are risks to both consumers and taxpayers if these firms get things wrong - look at the banks.
These firms need to be able to access all the ways there are to raise capital. Diversification reduces risks and enables firms to operate more efficiently raising capital to suit market conditions at the time. This actually helps control costs and reduces, costs to the consumer.
The public do get shares in return for their investment. Whether they invest direct or through pensions or ISA mutual funds. Here I am talking about equity, not bonds of course as bonds do not constitute equity ownership. Such bonds are available to the public via institutions as well of course.
This direct issue of bonds to the public might work well and may well help but the public who invest in these are taking on extra risk with a lower reward. I believe that there may be a 'mis-buying' scandal in such bonds eventually. Nevertheless having these as part of the mix of options with added diversification is good for the consumer.
Guest 698- Registered: 28 May 2010
- Posts: 8,664
Barry, you are wasting your energy trying to explain all this.
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,942
ALL POSTS ARE MY OWN PERSONAL VIEWS
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
It is clearly above your head Keith, based on that statement.
I do try Peter.
Keith Sansum1- Location: london
- Registered: 25 Aug 2010
- Posts: 23,942
you are very trying barryw
ALL POSTS ARE MY OWN PERSONAL VIEWS
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
i am sure it's all drip feed bully stuff.
