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LONDON, July 11 (Reuters) - Shares in British water utilities rose on Thursday after regulator Ofwat told companies to upgrade crumbling infrastructure, but without the big bill increases they had lobbied for.
Equity traders shrugged off the muted bill increase, after Ofwat released its draft determinations for the sector, including its views on company business plans, some of which it called "outstanding".
Shares in Pennon Group were up 6.7% at 0753 GMT, after the company also named Laura Flowerdew as its new CFO, replacing current finance chief Steve Buck.
United Utilities and Severn Trent shares were up 2.2% and 1.5%, respectively.
Water companies have routinely released sewage into rivers and seas, which have made Britain's waters increasingly dirty in the last five years, putting the regulator under intense pressure to act.
Thames Water, which is privately owned, warned on Tuesday it would run out of money next year if it did not secure 3.25 billion pounds ($4.18 billion) of equity and that it needed bigger bill rises to help it attract those funds.
For the next five years, Ofwat on Thursday said that companies would be able to increase average bills by 21%, or 94 pounds, well below what providers had wanted.
It called business plans by Severn Trent and Pennon Group "outstanding" with United Utilities classified as "standard".
"We think Pennon is a significant beneficiary of the outstanding business plan award given the de-rating we have seen in the stock versus peers and a view that this would not have been in market expectations," RBC Capital Markets analyst Alexander Wheeler said in a note.
"SVT outstanding also a positive, although arguably more expected given a view that SVT are one of the strongest names in the sector." ($1 = 0.7772 pounds) (Reporting by Samuel Indyk; Editing by Amanda Cooper)
