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Shouldn't the sharehlders finance a company's investment programme?
We do not tell the companies how to raise money. The decisions made by the companies will depend on the relative costs of sources of finance. Interest rates in recent years have been at historically low levels and companies have taken advantage of cheap borrowing.
Water companies raise funds from shareholders and financial markets to fund their capital expenditure programmes. They also use retained profits to fund the capital programme.
Customers do not pay the whole cost of the companies' operating and investment programmes. The companies need to raise sufficient capital to cover the interest on the money they borrow to finance the programmes. Customers meet those interest costs.
In order to attract funds, companies pay interest at rates which reflect market expectations. Companies decide the level of dividends they pay to their shareholders. Our price limits do not assume any increase to the level of dividends. In setting price limits we assume that companies will raise finance in the cheapest way.
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