Severn Trent Plc has accepted Ofwat’s Final Determination on Severn Trent Water’s AMP8 Business Plan.
Severn Trent Plc announced its acceptance alongside its latest trading update for the period to 23 January 2025 released this morning which says Severn Trent Water is on track to deliver a strong AMP7.
According to the update, financial performance for the year remains on track and the company expect to perform in line with guidance, which includes delivering a net ODI2 reward in year of over £100 million pre-customer-sharing in FY17/18 prices. This would bring the total net ODI reward in AMP7 to around £420 million in nominal prices (post-customer sharing), reflecting consistent sector-leading performance, the update says.
Acceptance of Ofwat’s PR24 Final Determination followed a detailed review and consideration of a broad range of stakeholders, including customers, colleagues and investors.
Severn Trent said the AMP8 totex allowance of £14.9 billion will generate real Regulatory Capital Value (RCV) growth of 45% and allow it to deliver significant progress on the environment and customer service, including:
Delivering the industry's fastest and most ambitious spills reduction programme, with the aim of halving spills by 2030;
Reducing pollutions by a further 30%;
Delivering a further 16% reduction in leakage and replacing around 1,400km of water mains;
Supporting growth in the region through investment in 70 waste treatment works; and
Achieving operational Net Zero by 2030.
The update says:
“We will deliver this step change in investment while maintaining the second lowest bill in England and supporting around 1 in 6 customers with their bills through a £575 million affordability package. We will be able to make this investment with extensive regulatory mechanisms in place which offer protection to both customers and investors.”
AMP8 dividend policy
The update says Severn Trent Plc Board has reviewed the Final Determination alongside current performance. Having considered the impacts on all stakeholders, including the many retail shareholders who rely on dividend income in return for their investment, the Board said that the Dividend Policy for AMP8 will be annual growth of CPIH. Based on the FY24/25 dividend of 121.71p, as guided, the dividend for FY25/26 is therefore anticipated to be 126.02p, using November 2024 CPIH.
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