United Utilities Group (LSE:UU.), the North West-focused water and wastewater company, said Ofwat's 2026 Cost Change Draft Decision backs the substantial majority of its first submission under the current five-year regulatory period, known as AMP8.
The draft decision includes allowances of approximately £975 million, keeping the company on track to deliver around £2.5 billion of investment through the annualised AMP8 reopener mechanism.
The company said the funding will boost network resilience and add water and wastewater capacity across the North West, supporting housing, digital infrastructure and climate policy goals.
United Utilities reiterated its wider financial framework, including around £11.5 billion of capital investment over AMP8, with regulatory capital value expected to grow around 10% annually to approximately £25 billion by 2030.
The company continues to target average regulatory returns of 10% to 11%, alongside dividend growth in line with CPIH inflation and a target gearing range of 55% to 65%.
Ofwat has requested additional evidence for a number of projects within the programme as part of its consultation.
"It is great to see this in-period regulatory mechanism working well, providing the opportunity to deliver the additional infrastructure needed to support the rapid economic growth we are seeing here in the North West", said chief executive Louise Beardmore.
United Utilities will submit its response by 24 September, ahead of Ofwat's Final Decision in December.
News Intelligence what this means for the company
Ofwat's draft decision backs approximately £975 million of United Utilities' first AMP8 cost reopener submission, keeping the company on track for £2.5 billion of total reopener funding across the five-year period. This validates the company's expanded capital investment programme—now £11.5 billion for AMP8—and removes near-term regulatory uncertainty around a material portion of its growth spending, though Ofwat has flagged additional evidence requests on some projects ahead of its final decision in December.
The draft approval materially de-risks United Utilities' ability to execute its £11.5 billion AMP8 capex plan and supports its target of 10% annual regulatory capital value growth to £25 billion by 2030. However, the final decision in December and Ofwat's requests for further project evidence mean execution risk remains until that point.
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