Pennon Group, the parent company of South West Water, has stressed it is in a strong position in a period of uncertainty as it deals with coronavirus and enters a new five-year investment cycle.
The company said it would pursue “growth options” in the water and wastewater sector after the completion of the sale of its waste management business Viridor. The sale to Kohlberg Kravis Roberts & Co for £4.2 billion is due to complete this summer.
It has extended its water and wastewater services to the Isles of Scilly, which had previously been independently supplied, largely from desalination. SWW was granted the licence by Defra to take over the supply and wastewater services after beginning assessments in 2018. This will come into effect from 1 April.
Drinking water services will be supplied on all five inhabited islands and wastewater services on St Mary’s and Tresco, where a sewerage network already exists.
Ahead of its full year results in June, Pennon said South West Water will end the current five-year AMP cycle in a net reward position after outperforming on its Outcome Delivery Incentives (ODIs).
It was impacted by the prolonged wet weather this year which it would said would mean a reduction in full-year revenue. There was 50 per cent more rain in the SWW region than the same period 2019, which has left its water resources above 95 per cent.
The group said it has ample funding for the business through the coronavirus uncertainty including c.£1.6 billion of cash and committed facilities providing liquidity. It also has £300 million of perpetual bonds that can be called in from May.
The company said the safety and well-being of its staff and customers remained the priority during the pandemic and as such it would focus only on essential customer visits and activities as well as carrying out tasks remotely wherever possible.
South West Water, which accepted its final determination from Ofwat in February, will begin the company’s Water Share Plus customer share scheme at the start of the price control period. It has been designed to give billpayers a stake and a voice in the water company.
The scheme will reward customers if the company outperforms on its regulatory targets.