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Severn Trent accepts final determination

Severn Trent has accepted Ofwat's final determination for the period 2020-2025.

The decision has been made taking into consideration:

  • The 'in the round' approach taken by Ofwat.
  • A totex allowance for the next five years of £6.8 billion - in line with the company’s PR19 business plan.
  • An expected regulatory capital value (RCV) real growth rate of 3.8% creating long-term value for the company’s shareholders. 

In its Q3 trading update for the period 1 October 2019 to 28 January 2020 the company said: “We continue to benefit from the efficiencies we have delivered in AMP6, putting us on the right cost run rates for AMP7. Our capital programme is now in its final stages with the Birmingham Resilience Programme due to complete construction in March.

“Overall, we remain on track to deliver at least £25 million in customer ODI net outperformance payments for the year. This will take the total amount deferred to AMP7 revenue to at least £177 million in nominal prices.

“We continue to deliver improvements in our operational water measures and the work we are doing to enhance our local environment through the Water Framework Directive is progressing well. As anticipated, the significantly more stretching targets we agreed with Ofwat for our flooding measures have been challenging and we expect penalties on some of these to partially offset outperformance in other areas.”

Last month Ofwat published its final PR19 price review, which includes a demand to cut average water bills by £50.

Author: Alec Peachey,
Topic: Policy & Regulation
Tags: ofwat , PR19 , Severn Trent Water

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