South West Water has announced it will offer customers a stake in the company, making it the first publicly part-owned water company since privatisation.
In plans submitted as part of PR19, the company is promising lower bills, improved service, better environmental protection and a stake and greater say in the company for customers, with an enhanced opportunity for extra rewards should South West Water beat its targets.
Part of the plans entail offering £20 million of accrued benefits from the PR14 Watershare mechanism to customers in the option of shares. The Watershare scheme was first introduced in 2015 and rewards customers for the company’s outperformance while protecting them from underperformance, with extra investment or even lower bills.
If given approval, the first of its kind customer share ownership scheme will be introduced from 2020.
The plan, entitled “A New Deal”, follows South West Water’s biggest ever customer consultation and was submitted yesterday (3 September) to industry regulator Ofwat.
The “new deal”includes plans to keep the average bill below inflation, delivering a decade of bill freezes and reductions. The company added that by 2025, bills will be lower than they were in 2010.
South West Water says it will spend more than £1 billion to improve services, enhance operational resilience and deliver the largest programme of environmental improvements for 15 years.
There is also a commitment to build two new state-of-art water treatment works for Bournemouth Water, which is part of South West Water.
Other aspects of the deal include:
- Increased protection for bathing waters and shellfish waters
- Major upgrades of drinking water treatment works, including Stithians, St Cleer, Prewley (near Okehampton) and Restormel (near Lostwithiel)
- Initiatives to ensure zero harmful pollutions by 2025
- Improvements to achieve sector-leading customer service
- The launch of a water efficiency initiative for unmetered customers
Chris Loughlin, chief executive of Pennon Group, South West Water’s parent company, said: “Five years ago we set ourselves stretching performance commitments. Today, drinking water is top quality, leakage targets have been met, supply interruptions, sewer blockages and flooding have all been reduced, and bathing water quality has hit record highs.
“We’re on track to deliver our 2015-20 business plan, but there’s always more to do. Our new business plan offers all-round improvements in what customers have told us they value most at a price they are prepared to pay.
“As customers have shaped our new plan and will be partners in its delivery, it’s only right that they should be offered a real stake in the business and a greater say in what we do and how we do it.
“That’s why, in 2020, we’re introducing a first-of-its-kind shareholder scheme for customers and a greater opportunity for them to hold us to account. In a natural evolution of our innovative Watershare scheme, we will continue to share our success with customers.
“The New Deal is the next step forward for us and represents a big leap forward for the water industry, putting more control into customers’ hands.”
Nick Buckland, chair of the independent Water Future customer panel of consumer and environmental stakeholders, said: “We believe this plan reflects the expectations of customers, delivering more of what matters to them and including a truly radical approach to empowering customers through the Watershare scheme.
“At every stage of the process the panel has challenged and tested South West Water’s customer engagement and proposals.
“We are pleased that the company has responded by delivering an ambitious and progressive plan which will bring multiple benefits to people, communities, business, and the environment of the unique regions the company serves.”