South West Water has been named as one of three water companies which have set a “new standard” for the sector as its business plan for 2020 to 2025 got the thumbs up from Ofwat today (31 January).
The Pennon Group subsidiary is the only water and sewerage company to have achieved fast track status for two consecutive price reviews.
For the 2019 price review, PR19, South West Water was labelled as fast track along with fellow companies listed on the London Stock Exchange – Severn Trent and United Utilities.
Having been awarded “enhanced” status in PR14, South West Water has now been given the green light for its “New Deal” plan.
The company says its customers can look forward to lower bills, further investment, a “unique share offering” and more control in how the company is run.
Its plan will be fast-tracked for a draft price determination in April, providing “early planning certainty” for the company and its customers.
The remaining 14 water companies, which were placed in slow track and significant scrutiny, will all have to resubmit their business plans to the regulator in the spring.
South West Water’s five-year plan sees the average water and sewerage bill falling by 11 per cent in real terms between 2020 and 2025, with the average bill in 2025 being lower than it was in 2010. It also includes “extra steps being taken” to eliminate water poverty.
The company plans to spend more than £1 billion to improve services, enhance the environment and strengthen resilience.
As part of the “New Deal” customers will be offered a shareholding in South West Water’s parent company, Pennon Group. It builds on an existing scheme which shares the water company’s success with customers either through extra investment or lower bills.
In its initial assessment of South West Water’s business plan, Ofwat said the plan was assessed as “high quality” across a range of test areas.
“Its plan includes ambitious, innovative and sector-leading proposals. For example, it leads the sector with its outcome performance commitment and incentives package, where it is pushing itself to go further including in areas particularly important to customers such as reducing pollution incidents and incidents of sewer flooding inside customer premises,” the regulator said.
Chris Loughlin, chief executive of Pennon Group, said: “We’re encouraged that the regulator has a high regard for our business plan, particularly as it was shaped by our biggest ever consultation with customers. We are very grateful for the feedback we received.
“Our New Deal empowers customers to be part of our business and have more control. It redefines the relationship between a water company and its customers and recognises our societal responsibilities.”
Bournemouth Water, which is owned by South West Water, will reduce bills by 9 per cent in real terms and “invest heavily” in improved drinking water services, including two new water treatment works.
South West Water submitted its five-year business plan to Ofwat in September 2018, following its biggest ever customer consultation, which showed a public approval rating of at least 88 per cent for the plan and received the support of the independent Water Future Customer Panel.