Business
Severn Trent Water submits business plan
Severn Trent Water submits business plan.
About this update from Severn Trent Plc
[{"type":"text","content":"\n \nRNS Number : 4177U Severn Trent PLC 02 December 2013 \n \n\n2 December 2013\n \nSevern Trent Water submits business plan for the period 2015 - 2020\n \nSevern Trent Plc confirms that its wholly owned subsidiary Severn Trent Water has today submitted its Final Business Plan (the \"Plan\") to the regulator Ofwat for the next regulatory period, AMP6, which runs from April 2015 - March 2020.\n \nNote: All plan data is 2012/13 prices unless otherwise stated\n \nHighlights:\n \n· Price changes equivalent to an average of 1.2% below inflation over the five year period; Prices frozen in year one and then rising by less than inflation. Bills will be £12 lower in real terms by 2020;\n· Total expenditure (totex) of approximately £6 billion;\n· Capital expenditure approximately £3.2 billion, an increase of £600 million on the prior period;\n· Operational expenditure of approximately £2.8 billion, flat over the prior period;\n· RCV expected to be over £10 billion by 2020 (nominal)1;\n· Planned lower blended debt costs of 2.54% (vs. 3.6% in current regulatory period) reflected in wholesale weighted average cost of capital (WACC) reducing to 4.2%, from 5.1%, cost of equity 6.7% (vs. 7.1% in current regulatory period); \n· Retail margin of 0.7% household and 3% business;\n· 60% gearing (net debt/RCV) planning assumption;\n· Maintaining investment grade credit rating; funding requirement of £2.6 billion or 60% of current debt portfolio.\n \n1. Nominal assumes inflation of 3.3% p.a., per Ofwat assumption.\n \nThe Plan has been driven by and for our customers and stakeholders. We believe that the Plan offers value for money and is fair and balanced. It delivers better value, better services and a healthier environment.\n \nValue for money\nSevern Trent already has the lowest combined average bills in England and Wales with price rises over the current regulatory period being kept below inflation. Price rises in the next period will be kept to an equivalent of 1.2% below inflation, with prices frozen in year one and then rising by less than inflation.\n \nWe will invest around £3.2 billion, an increase of £600 million on t...