Ofwat’s PR19 final determinations, published this morning need to be looked at in the round, but we focus on three key components: WACC, totex, and ODIs. Ofwat has set the WACC at 2.92% CPIH real (4.98% nominal) at the wholesale level, with the cost of equity at 4.19%% CPIH real, and the overall cost of debt at 2.14% CPIH real. Our estimates for WACC was 2.94% CPIH real (5% nominal), with a cost of equity of 4.47% CPIH real, and an overall cost of debt of 2.10% CPIH real. (See Figure 1) Totex allowances are broadly unchanged for each of the three listed companies. Severn Trent Water has allowed totex of £6,463m vs. £6,475m as at July’s slow-track draft determinations, South West Water has allowed totex of £1,994m vs. £1,944m, and United Utilities has allowed totex of £5,814m vs. £5,837m. Severn Trent’s Hafren Dyfrdwy’s allowed totex is £166m vs. £164m at draft determination. (See Figure 2) We have compared the key common and bespoke ODIs for the three listed companies to the position set out in April’s fast-track draft determinations. Severn Trent’s ODI RORE range is now -2.83% (P10) to +1.90% (P90) vs. -3.9% (P10) to +1.7% (P90). (See Figure 3) South West Water’s (Pennon’s) ODI RORE range is now -2.12% (P10) to +1.84% (P90) vs. -3.2% (P10) to +1.6% (P90). (See Figure 8) United Utilities’ ODI RORE range is now -1.38% (P10) to +1.21% (P90) vs. -2.3% (P10) to +1.0% (P90). (See Figure 13). We note, however, that July’s slow-track draft determinations had negative implications for United Utilities, so today’s announcement also needs to be viewed in this context. We view today’s announcement as a moderate positive for the listed companies, with the added benefit of an extended period of clarity. For United Utilities, an accelerated shift to CPIH is revenue positive, and should assist in reducing fears over dividend sustainability. Our estimates, target prices and rating for each of Pennon, Severn Trent, and United Utilities are placed under review as we work through the significant detail presented today. Ofwat is hosting a City Briefing on the final determinations at 2pm (GMT) today. This can be accessed via +44 330 336 9411, title: Ofwat City Briefing, code: 3717627.