Pennon bosses will look to bolster water supply resilience in the SES region by replicating measures it used in South West Water’s region.
This includes repurposing old quarries and reservoirs to store additional water.
Pennon, which operates Bristol and Bournemouth water companies as well as South West, announced it will add SES to its portfolio following an acquisition worth £89 million.
The parent organisation is keen apply successes to the new acquisition to address water resource issues in the southeast water-stressed region.
In 2022 an extended dry period left the region in drought and highlighted the need for additional supplies.
Chief executive Susan Davy revealed that the parent company is keen to explore the feasibility of repurposing an old sand quarry in Godstone as a novel water resource to store water for drier periods.
It follows a similar strategy implement in the southwest where Pennon responded by using old quarries and reservoirs as extra storage to increase supplies by 45%.
Davy said Pennon was looking at options to use the old Surrey quarry as well as reservoirs in the SES region. Managing water demand as well as fixing leaks and adding new resources will reduce the need for unsustainable abstraction in the area to protect rivers and chalk streams.
As well as operational changes, Pennon’s senior team said they were preparing to lower the gearing ratio of the new acquisition.
A £180 million equity issue was fully subscribed within its first day, which Pennon said was to bring SES’ gearing in line with its group level of 55% – 65% gearing.
The deal is subject to regulatory approval that could take between six and 12 months to complete. Clearance is required from Ofwat as well as the Competition and Markets Authority (CMA).
It means the deal may not be signed off until after final determinations for PR24 business plans are complete in December.
Current SES owners Sumitomo Corporation and Osaka Gas put the firm on the market last year. They had to stump up more than £20 million in July to address Ofwat’s concerns about financial resilience.