Severn Trent first to reveal PR24 plan

Ahead of Ofwat’s 2 October deadline for submitting 2025-2030 business plans, Severn Trent has unveiled its ambition to invest £12.9 billion between 2025-30 in what the company describes as a “sustainability-led plan”.

The PR24 plan sets out to cut storm overflow spills and pollution incidents by 30%, as well as repeating the PR19 commitment to reduce leakage by 16% during the period, while creating 7,000 jobs.

Severn Trent, one of three listed companies in the sector, is seeking to raise £1 billion through an equity raising to support its ambition of doubling total expenditure compared to the current asset management period. For PR19, the company’s plan to spend £6.6 billion was fast-tracked by the regulator.

For each household in its region, Severn Trent said it will spend £2,400 across its area including £5 billion on environmental enhancement.

Bills are anticipated to rise by £28 a year by 2029-30 to an average of £518 for combined water and wastewater services. Support in the shape of £550 million for 693,000 billpayers in financial difficulty will be available.

Qatar Investment Authority will invest £500 million to the organisation together with an equity raising of £500 million of new shares. In addition, £8 million of shares will be available to retail investors and a director subscription to the value of £8 million will contribute a further £275,000.

The company anticipates its gearing will average 65.2% for AMP8.

The company earned outperformance payments of £88 million for meeting outcome delivery incentives (ODIs) during 2022-23, announced by Ofwat this week.

For the next five years, environmental spending by all companies has been forecast to be far greater than previous periods. Severn Trent said it will plough £3 billion into its water industry national environment programme (WINEP). This represents a six times uplift from the £471 million plan for 2020-25.

Spending of £700 million to secure novel water resources will add 200 million litres per day, while the company hopes to eliminate 240,000 tonnes of carbon emissions to deliver operational net zero by 2030.

Liv Garfield, chief executive, said the plan will transform the networks by 2030.

“At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth. At the same time, our £550 million affordability scheme aims to ensure no customer in our region needs to worry about affording their water bill.

“We’ve listened hard to our customers – not only will we make sure we keep building on our sector-leading track record, but we will also work to make our region proud of their water company. This investment will contribute to our positive economic, environmental and social impact in the communities we serve for decades to come.”

The full plan, together with the rest of the sector’s, is due to be published Monday. Utility Week will be running live coverage as they are released, with snap analysis on the key talking points. Boomark this page for the latest updates.