The Independent Water Commission must determine whether equity investment has been value for money for customers. If it is advisable to continue with a totally privatised model, the Commission needs to create a comprehensive but stable regulatory environment for water companies and their investors to ensure that the sector is low risk and low reward. As part of its work looking at narrowing the variability of returns, the Commission should investigate whether there should be a clearer ‘floor’ and ‘ceiling’ for dividends to provide reassurance to all sides, one that takes into account all returns that investors receive. Between these thresholds, that regulatory system should encourage higher dividends for better performance, and 48 lower returns for poor performance. To ensure that customer service and environmental outcomes are prioritised, dividends should potentially be blocked entirely where companies have failed to deliver projects required by regulators and where there have serious infringements of licences, permits and performance targets, such as serious pollution events. To ensure that this works as intended, and to prevent the risk of unjustified dividends leaving a company, pre-approval for dividends by the regulator might be necessary. (Recommendation, Paragraph 32)