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Severn Trent has set out its intention to remain an industry leader across performance commitments in the next asset management period (AMP8) as the cornerstone to its ambitious plan.
The company said its performance record gave confidence to meet its goals for 2025-30. It has routinely outperformed against Ofwat targets and earned 2.9% outperformance in AMP6 and 5.2% so far in AMP7.
SVT’s plan highlights total pollutions, storm overflows and water usage – including that lost to leaks as well as consumed – as three core areas it will push hard on in 2025-30.
Of its £12.9 billion total expenditure, £7.9 billion is earmarked for base spending and £5 billion of enhancement needed to improve the environment.
Of that enhancement investment, the majority (82%) will be spent delivering statutory obligations including phosphate removal and addressing combined sewer overflows (CSOs). A further 12% will be spent lining up work for progress to meet obligations after 2030, and 6% to manage resilience risks.
Strom overflows will dominate the WINEP spend at £1.1 billion while £700 million will be dedicated to removing phosphates. During AMP8 the company will eliminate 99% of the reasons for rivers in the region not achieving good ecological status including through phosphorous removal from 1,375km of river.
The company is currently leading the industry on measuring and eliminating process emissions at wastewater treatment plants and will continue these efforts on the road to net zero. It plans to spend £300 million stopping greenhouse gases being emitted during sewage treatment and bioresource processing as well as £100 million to replace fossil fuels being used across the business.
In line with commitments to reduce the number of discharges from combined sewer overflows (CSOs) the company said its ambition to improve at least 562 of the 2,400 CSOs in the region will allow it to deliver on the government targets for 2050 five years early.
Commitments include:
- 30% reduction in overall pollution incidents
- Leakage down 16% – including mains replacement programme
- Upgrade pipes in 1000 schools to remove lead where necessary
To fund the work over the five years, Severn Trent said it plans to raise £5.9 billion of debt, of which £2.1 billion would be refinancing and £3.8 billion of new debt. The company said its gearing would remain under 70% for the duration of the AMP, which is above Ofwat’s notional gearing of 55% set out in its PR24 methodology.
For every household, the company will invest £2,400 into the region. It said bills are expected to stay below the industry average, despite a hike of £99 by 2030 from 2022/23 annual bills. Support for customers to the tune of £550 million will be made available in reductions and assistance to more than half a million households.
The plan stipulated that senior leader bonuses would only be paid from revenues from Severn Trent Plc’s non-regulated companies, as they were this year.
An area it did not outperform in was customer experience. It will plunge £150 million into new technologies and insourcing roles ahead of the next AMP, this includes adopting the Kraken platform to facilitate a shift to smart metering and networks.
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