SES raises cost and customer concerns to regulator

SES Water has accepted its final determination from Ofwat but highlighted concerns to the regulator regarding the gap in its costs and the required drop in bills.

The company, which wrote its business plan for 2020 -25 after extensive customer research, emphasised the view that its customers want the company to invest to ensure long-term resilience. This echoed the comments of Wessex, when accepting its final determination last week.

Recently appointed chief executive Ian Cain said: “Delivering our revised plan – the most ambitious in our history – will not be without its challenges, largely due to the remaining cost gap and the reduction in allowed revenue from customer bills. We have highlighted this concern to Ofwat, as well as the need to look at the alternative solutions available to ensure we are able to adequately deliver our customer service activities going forwards.

“We have also emphasised the view, shared by our Customer Scrutiny Panel, that our customers want us to invest to ensure we can continue to supply a resilient supply of high-quality water for the long-term, rather than further reduce the bill for what they already consider a good value, essential service.”

With just one day to go before the deadline for companies to request an appeal to the Competition and Markets Authority, the company has joined Severn Trent, United Utilities, Hafren Dyfrdwy, Welsh and Wessex in publicly accepting the determination. While Yorkshire and Bristol have requested to appeal the decision to the the CMA.

The final determination set stretching targets of a 15 per cent bill reduction, compared to SES’s proposal of 7.1 per cent. Ofwat allowed SES £254.6 million of wholesale totex – which was £12.7 million lower than the company’s position but up £29.8 million on the draft determination.

The company’s final allowed revenue was £301.5 million, leaving a shortfall from its proposal of £313.1 million.

Cain said the company under his leadership will remain committed to building on its strong performance and will set new standards in the areas that matter most to its customers.

The point was raised to Ofwat in response to the publication of the draft determination in July, when SES accepted many of the interventions, but said the draft determination did not reflect the priorities of its customers.

The new chief executive joined this month to replace Anthony Ferrar after 11 years leading SES. Cain was previously chief executive officer of iSupplyEnergy and prior to that had been managing director of retail and group customer service at Thames Water.