Severn Trent to take its time assessing Ofwat proposals
MIDLANDS utility Severn Trent is to assess new proposals from industry watchdog Ofwat on increases to household water bills.
Ofwat has stipulated that bills in England and Wales will go up less than the cost of living during the next five years, making bills on average 5% lower, before inflation, by 2019-20.
The move comes after business plan submissions to the regulator by the 18 water and sewerage companies outlining their five year plans.
Most of the companies have been told that they should amend some of their plans.
Severn Trent said the regulator’s proposals were detailed and would need time to assess properly.
It said: “From an initial analysis, we welcome Ofwat’s recognition that the revisions made to our plan have many strengths. We have been in discussion with Ofwat since April focused on three main areas: the Birmingham resilience scheme, legacy adjustments and outcome delivery incentives (ODIs).”
In June, Severn Trent told Ofwat it was pledging a further £125m to ensure it maintained water supplies to Birmingham.
The project is focused on the Elan Valley Aqueduct, which opened in 1906 and brings water from the Elan Valley reservoirs in Wales to Birmingham. The project will reinforce water supplies for Birmingham to minimise the possibility of future supply interruptions.
Severn Trent had originally set aside £255m for the work but increased this to £379m to enable it to complete the work ahead of schedule – and within the five-year plan period.
The utility said it continued to support the moves by Ofwat to introduce incentive-based regulation to the industry and noted that Ofwat had accepted 17 out of the 27 of the delivery incentives proposed in the revised business plan.
It said that of the 10 that had changed, four were due to industry-wide changes by Ofwat to align incentives, with the remaining six changes specific to Severn Trent.
Liv Garfield, Severn Trent chief executive, said: “During the price review Ofwat have challenged us hard to achieve the best possible outcomes for customers, and we have listened and responded.
“The Draft Determination is a complex document and there is a lot of detail to consider. Over the next five weeks we will be carefully and thoroughly reviewing its content and conclusions, and responding to Ofwat.
“We are pleased that on first reading, in many areas the Draft Determination is in line with our revised business plan. Ofwat has accepted our totex plans, and almost two thirds of our proposed ODIs, and we look forward to providing further information on the Birmingham resilience scheme, with a view to its inclusion in the Final Determination in December.”
All companies and consumer groups can respond to the Ofwat proposals by October 3. The final decision will be made by December 12, with bill changes taking effect from April 1, 2015.
