Severn Trent pledges further £125m to ensure Birmingham’s supplies are maintained

SEVERN Trent Water has submitted its revised business plan to industry regulator Ofwat after pledging a further £125m to ensure it maintains supplies to Birmingham.

The plan, which covers the period between April 2015 and March 2020, had to be resubmitted after Ofwat demanded to know more about the so-called ‘Birmingham resilience project’.

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 it has now increased this to £379m to enable it to complete the work ahead of schedule – and within the five-year plan period.

“We have submitted the required information in response to all the evidence requests made by Ofwat. We have also had a positive engagement with other stakeholders and support from the Water Forum, our customer challenge group,” said Severn Trent in a statement.

“The Birmingham resilience scheme will now be completed in one five-year regulatory period, rather than two, providing customers with earlier improvements. As we will be delivering the scheme more quickly, the total investment programme is now £125m higher than the original plan.”

The plan also pledges a further reduction in average customer bills, which it said would now decrease by a further 0.3% to 1.5% in real terms over the five year period, which it claims is the lowest combined average bill in England and Wales.

The plan is based on Ofwat’s weighted average cost of capital guidance and total expenditure is estimated £6.2bn, including capital expenditure of £3.3bn. Regulatory Capital Value is expected to be c.£10.1bn by 2020.
 
Liv Garfield, Chief Executive, Severn Trent, said: “We have continued a constructive engagement with Ofwat and other stakeholders in the last few months to revise our plan.

“We are focused on delivering what customers want and the environment needs, while keeping prices down. Customers will benefit from improved resilience and better services, with bill rises over 2015-2020 kept to an equivalent of 1.5% below inflation. Severn Trent already has the lowest combined average bill in England and Wales, currently £60 below the industry average, which will be frozen for next year.”

She said the utility had striven to develop the right balance between the service customers received, the bills they pay, and returns to investors.

“We believe our plan is fair and balanced whilst delivering better services, better value and a healthier environment,” she said.