Severn Trent bills to be cut by 2015
Severn Trent customers will see their bills drop by an average of £13 in the next five years after the company agreed not to fight a ruling from the water watchdog.Severn Trent customers will see their bills drop by an average of £13 in the next five years after the company agreed not to fight a ruling from the water watchdog. Bosses at the utility giant say that they will abide by Ofwat's demand to reduce the average household bill by four per cent by 2015, giving customers throughout Shropshire the lowest water bills in the country. Severn Trent, which serves more than eight million customers across the heart of the UK, said it would be necessary to impose a one-off 10 per cent cut in its dividend payment to pay for the decrease. The move will see an average household's bill drop to an average of £291 a year and the company also plans to invest around £800 per property to improve water and sewerage services. Read more in the Shropshire Star
Severn Trent customers will see their bills drop by an average of £13 in the next five years after the company agreed not to fight a ruling from the water watchdog.
Bosses at the utility giant say that they will abide by Ofwat's demand to reduce the average household bill by four per cent by 2015, giving customers throughout Shropshire the lowest water bills in the country.
Severn Trent, which serves more than eight million customers across the heart of the UK, said it would be necessary to impose a one-off 10 per cent cut in its dividend payment to pay for the decrease.
The move will see an average household's bill drop to an average of £291 a year and the company also plans to invest around £800 per property to improve water and sewerage services.
Chief executive Tony Wray said: "Our plans will ensure that we can offer customers the lowest average water and sewerage bills across the whole of England and Wales, while still giving shareholders a sustainable return and improving the efficiency of our operations.
"Ofwat's final determination represents a tough outcome. By continuing our programme of process and efficiency improvements we believe we can meet our operational obligations for the next five years, delivering the service level improvements customers have told us they value."
The adjustment to the dividend will be made in the first year of the price determination period.
Severn Trent had the option to refer Ofwat's decision to the Competition Commission but joined South West Water owner Pennon in accepting the settlement.
Privatised utilities have to raise the billions needed to invest in the network from the City as well as from customer bills, but a stricter settlement from Ofwat means smaller returns for investors and makes the sector less attractive. Since the credit crunch struck, investors have also been more sensitive to risk and want bigger returns on their investment, putting even more pressure on utilities to find savings elsewhere.
By Business Editor Amy Bould
