Severn Trent customer water bills to rise by almost 37% by end of decade
PRIVATIZED WATER
Mark Sweney
Fri, 29 September 2023
Photograph: Rui Vieira/PA
Severn Trent is to increase customers’ bills by almost 37% by the end of the decade and has raised £1bn in investment – half from Qatar’s sovereign wealth fund – to pay for a multibillion investment plan to improve its water network over the next five years.
The company, which has 4.2 million customers, said the average annual household bill would rise from £379 in 2024-25 to £518 in 2029-30.
It predicted that by 2030 the cost of a bill would be 1.3% of the disposable income of a typical household in the Severn Trent region, compared with 1.2% today, and attempted to soften the blow by announcing a £550m financial support package for struggling customers.
“Severn Trent recognises that while this increase is spread over a long period, today’s announcement comes at a difficult time for some customers,” the company said. “That is why we have included a £550m financial support package as a core part of the plan. This will help 693,000 customers pay their bill each year by 2030.”
The company plans to invest a record £12.9bn on its network over the next five years, including £5bn on projects designed to tackle the water industry’s poor environmental record, which it said would create 7,000 jobs across the Midlands region.
As part of the investment plan, Severn Trent is raising £1bn, with £500m from the Qatar Investment Authority, to “ensure we can deliver this scale investment programme responsibly”.
“We are consistently named in the top category for financial resilience by [water regulator] Ofwat,” the company said. “And this remains a clear priority for us.”
The QIA is a top-five shareholder in Severn Trent, holding a stake of 4.9%. The water company’s biggest shareholders are BlackRock (13%) and Lazard (7.45%).
Earlier this week, Ofwat ordered water companies in England and Wales to return £114m to customers through lower bills next year because progress on leakage and sewage spills had been “too slow”.
In May, water companies in England apologised to customers and announced £10bn in infrastructure upgrades to fix the sewage problems, which will ultimately be paid for by customers.
Mark Sweney
Fri, 29 September 2023
Photograph: Rui Vieira/PA
Severn Trent is to increase customers’ bills by almost 37% by the end of the decade and has raised £1bn in investment – half from Qatar’s sovereign wealth fund – to pay for a multibillion investment plan to improve its water network over the next five years.
The company, which has 4.2 million customers, said the average annual household bill would rise from £379 in 2024-25 to £518 in 2029-30.
It predicted that by 2030 the cost of a bill would be 1.3% of the disposable income of a typical household in the Severn Trent region, compared with 1.2% today, and attempted to soften the blow by announcing a £550m financial support package for struggling customers.
“Severn Trent recognises that while this increase is spread over a long period, today’s announcement comes at a difficult time for some customers,” the company said. “That is why we have included a £550m financial support package as a core part of the plan. This will help 693,000 customers pay their bill each year by 2030.”
The company plans to invest a record £12.9bn on its network over the next five years, including £5bn on projects designed to tackle the water industry’s poor environmental record, which it said would create 7,000 jobs across the Midlands region.
As part of the investment plan, Severn Trent is raising £1bn, with £500m from the Qatar Investment Authority, to “ensure we can deliver this scale investment programme responsibly”.
“We are consistently named in the top category for financial resilience by [water regulator] Ofwat,” the company said. “And this remains a clear priority for us.”
The QIA is a top-five shareholder in Severn Trent, holding a stake of 4.9%. The water company’s biggest shareholders are BlackRock (13%) and Lazard (7.45%).
Earlier this week, Ofwat ordered water companies in England and Wales to return £114m to customers through lower bills next year because progress on leakage and sewage spills had been “too slow”.
In May, water companies in England apologised to customers and announced £10bn in infrastructure upgrades to fix the sewage problems, which will ultimately be paid for by customers.
Millions of households face 37pc jump in water bills
Melissa Lawford
Fri, 29 September 2023
Severn Trent boss, Liv Garfield, promised the cost increase would transform the company’s network and result in fewer leaks
Melissa Lawford
Fri, 29 September 2023
Severn Trent boss, Liv Garfield, promised the cost increase would transform the company’s network and result in fewer leaks
- Tayfun Salci
Millions of Severn Trent customers will see their water bills surge by more than £100 a year after the company launched a £12.9bn turnaround plan.
The utility giant on Friday confirmed plans to raise bills by 37pc by the end of the decade as it looks to raise cash to invest in reducing sewage spills and fixing pipes across its network.
Severn Trent’s plan will mean 4.2 million customers across the Midlands and Wales will have to pay an extra £139 a year on average by the end of the decade.
The announcement is the first in what is likely to be an industry-wise jump in bills.
All 17 water companies across England and Wales have until midday on Monday to submit their five-year business plans to the regulator Ofwat, which are expected to include increases in bills to cover the costs of environmental works.
Martin Young, senior analyst at Investec, said: “Severn Trent is probably at the bottom end of the range because they started off with a cheaper bill.”
Documents leaked to the Times over the summer showed that some water companies were planning to raise bills by as much as 56pc.
Mr Young said the documents suggested average bills will rise from £441 to £570. However, these figures do not account for inflation.
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “Water companies have already indicated that there are likely to be some substantial bill rises over the next five years to fund the investment that customers want to see in improving services and protecting the environment.”
Under Severn Trent’s proposals, which will be submitted to water regulator Ofwat on Monday, annual bills will rise from £379 in 2024-25 to £518 by 2029-30.
It announced the planned increase to help fund a £12.9bn investment in its ailing infrastructure.
The water company will invest billions into reducing pollution across UK rivers and has targeted reducing sewage spills by a third by 2030.
Severn Trent was one of four water companies fined a collective total of £94m by the Environment Agency for dumping sewage between 2018 and 2022.
It has also become the first UK water supplier to face a class action lawsuit over sewage pollution, although it has rejected the allegations.
As well as increasing bills, the company on Friday announced plans to raise £1bn selling shares to help fund its plans. It included a £500m investment from Qatar’s sovereign wealth fund, which was already one of the company’s biggest shareholders.
The Qatar Investment Authority becomes Severn Trent’s second-largest shareholder after the investment. The Middle Eastern nation first took a £200m stake in the supplier in 2019.
Severn Trent said that although customers would be paying an extra £139 per year, this would be roughly in line with the expected increase in household incomes.
Chief executive Liv Garfield said: “By 2030 we will have transformed our network to provide our customers with the very best service.
“At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth.”
Debt-laden water companies have been battling increased financial pressures over the past year, as the cost of cleaning up rivers coincided with higher interest rates.
Earlier this year concerns about Thames Water’s £14bn debt pile sparked emergency talks between the Government and Ofwat, as they considered possibly nationalising Britain’s largest supplier.
Severn Trent, which has nearly £7bn of debts, was not involved in the talks.
Millions of Severn Trent customers will see their water bills surge by more than £100 a year after the company launched a £12.9bn turnaround plan.
The utility giant on Friday confirmed plans to raise bills by 37pc by the end of the decade as it looks to raise cash to invest in reducing sewage spills and fixing pipes across its network.
Severn Trent’s plan will mean 4.2 million customers across the Midlands and Wales will have to pay an extra £139 a year on average by the end of the decade.
The announcement is the first in what is likely to be an industry-wise jump in bills.
All 17 water companies across England and Wales have until midday on Monday to submit their five-year business plans to the regulator Ofwat, which are expected to include increases in bills to cover the costs of environmental works.
Martin Young, senior analyst at Investec, said: “Severn Trent is probably at the bottom end of the range because they started off with a cheaper bill.”
Documents leaked to the Times over the summer showed that some water companies were planning to raise bills by as much as 56pc.
Mr Young said the documents suggested average bills will rise from £441 to £570. However, these figures do not account for inflation.
Mike Keil, chief executive of the Consumer Council for Water (CCW), said: “Water companies have already indicated that there are likely to be some substantial bill rises over the next five years to fund the investment that customers want to see in improving services and protecting the environment.”
Under Severn Trent’s proposals, which will be submitted to water regulator Ofwat on Monday, annual bills will rise from £379 in 2024-25 to £518 by 2029-30.
It announced the planned increase to help fund a £12.9bn investment in its ailing infrastructure.
The water company will invest billions into reducing pollution across UK rivers and has targeted reducing sewage spills by a third by 2030.
Severn Trent was one of four water companies fined a collective total of £94m by the Environment Agency for dumping sewage between 2018 and 2022.
It has also become the first UK water supplier to face a class action lawsuit over sewage pollution, although it has rejected the allegations.
As well as increasing bills, the company on Friday announced plans to raise £1bn selling shares to help fund its plans. It included a £500m investment from Qatar’s sovereign wealth fund, which was already one of the company’s biggest shareholders.
The Qatar Investment Authority becomes Severn Trent’s second-largest shareholder after the investment. The Middle Eastern nation first took a £200m stake in the supplier in 2019.
Severn Trent said that although customers would be paying an extra £139 per year, this would be roughly in line with the expected increase in household incomes.
Chief executive Liv Garfield said: “By 2030 we will have transformed our network to provide our customers with the very best service.
“At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth.”
Debt-laden water companies have been battling increased financial pressures over the past year, as the cost of cleaning up rivers coincided with higher interest rates.
Earlier this year concerns about Thames Water’s £14bn debt pile sparked emergency talks between the Government and Ofwat, as they considered possibly nationalising Britain’s largest supplier.
Severn Trent, which has nearly £7bn of debts, was not involved in the talks.
Severn Trent’s surprise £1 billion share sale points to wave of water industry spending
Michael Hunter
Fri, 29 September 2023
Severn Trent’s CEO Liv Garfield (Severn Trent)
There was clear insight into the looming costs of modernising the UK’s water industry today, when Severn Trent announced a £1 billion share sale.
The capital raising came alongside plans from the FTSE 100 utility giant for spending of almost £13 billion for the next phase of its business plan. The rest of the industry is due to file new five-year plans with regulators next week.
Much of the next round of spending will on cutting the overspills of raw sewage and the mass leaks of fresh water from supply pipes that have left the water industry reeling from a wave of public anger.
Severn Trent’s market value is around £6 billion. It supplies almost five million homes from the Bristol Channel to the Humber. The new five-year plan runs from April 2025 to the end of April 2030 and is the first sign of the extent of industry spending in that period.
London’s supplier, Thames Water, has 15 million customers, or about a quarter of the UK population. It has been grappling with a £14 billion debt burden and its investors have already stumped up £750 million in fresh cash in July. Its next five-year plan has not been released.
Thames was told this week to cut household bills by £100 million next year after regulators cracked down on wider inadequate performance in the industry toward cutting sewage spills and leaks.
Severn Trent’s £4-million-a-year boss, Liv Garfield, hit the headlines this summer with a different kind of leak. In an email to other senior utility executives, she suggested setting up “an off-the-record roundtable” discussion group. It came amid calls from the general public for the re-nationalisation of water companies.
Today’s City fundraising was immediately backed by one of the world’s major sovereign wealth funds. Qatar Investment Authority will snap up half of the stock on offer. The remaining £500 million is priced at 2150p per share for institutional investors according to newswire reports.
Retail investors will be able to buy into a smaller sale, which could raise around £7 million.
Severn Trent’s stock rose 40p to 2306p.
City experts were not expecting the Severn Trent share issue, but pointed out that the rally for the stock after the announcement was a clear sign it was well-received on the market. Usually, a share issue leads to an immediate slip in price, ahead of the increased supply in stock
Severn Trent to raise £1bn to help fund transformation plan
Henry Saker-Clark, PA Deputy Business Editor
Fri, 29 September 2023
Severn Trent is seeking to raise £1 billion to help support a transformation plan that is “expected to create 7,000 jobs” across the midlands.
The water supplier has launched a pre-emptive equity placing to start raising funds and stressed that the firm is “maintaining financial resilience”.
The utility firm said it plans to spend £12.9 billion in supporting its network over the next five-year regulatory period.
It said this will include £5 billion of investment focused on improving capacity and service beyond current levels, with £3 billion of this focused towards aiding the “natural environment”.
Liv Garfield, chief executive officer of Severn Trent (Veuve Clicquot/PA)
The plan comes amid a period of intense scrutiny over the water sector and renewed speculation over the potential for nationalisation in the industry.
Significant financial instability at debt-laden rival Thames Water drove calls for political intervention, raising questions over the financing of the industry, while firms have also come under pressure over environmental issues.
On Friday, Severn Trent said its new business plan will be submitted to regulator Ofwat on Monday following the equity raise.
The firm said the plan will help it towards a 16% reduction in leakage and a 30% reduction in spills from storm overflows, putting it on track to deliver the Government’s 2050 industry targets five years early.
Severn Trent also said the investments are expected to create up to 7,000 jobs directly in the business and supply chain.
Liv Garfield, chief executive officer at Severn Trent, said: “By 2030 we will have transformed our network to provide our customers with the very best service.
“At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth.
“At the same time, our £550 million affordability scheme aims to ensure no customer in our region needs to worry about affording their water bill.
“We’ve listened hard to our customers, not only will we make sure we keep building on our sector-leading track record, but we will also work to make our region proud of their water company.”
Michael Hunter
Fri, 29 September 2023
Severn Trent’s CEO Liv Garfield (Severn Trent)
There was clear insight into the looming costs of modernising the UK’s water industry today, when Severn Trent announced a £1 billion share sale.
The capital raising came alongside plans from the FTSE 100 utility giant for spending of almost £13 billion for the next phase of its business plan. The rest of the industry is due to file new five-year plans with regulators next week.
Much of the next round of spending will on cutting the overspills of raw sewage and the mass leaks of fresh water from supply pipes that have left the water industry reeling from a wave of public anger.
Severn Trent’s market value is around £6 billion. It supplies almost five million homes from the Bristol Channel to the Humber. The new five-year plan runs from April 2025 to the end of April 2030 and is the first sign of the extent of industry spending in that period.
London’s supplier, Thames Water, has 15 million customers, or about a quarter of the UK population. It has been grappling with a £14 billion debt burden and its investors have already stumped up £750 million in fresh cash in July. Its next five-year plan has not been released.
Thames was told this week to cut household bills by £100 million next year after regulators cracked down on wider inadequate performance in the industry toward cutting sewage spills and leaks.
Severn Trent’s £4-million-a-year boss, Liv Garfield, hit the headlines this summer with a different kind of leak. In an email to other senior utility executives, she suggested setting up “an off-the-record roundtable” discussion group. It came amid calls from the general public for the re-nationalisation of water companies.
Today’s City fundraising was immediately backed by one of the world’s major sovereign wealth funds. Qatar Investment Authority will snap up half of the stock on offer. The remaining £500 million is priced at 2150p per share for institutional investors according to newswire reports.
Retail investors will be able to buy into a smaller sale, which could raise around £7 million.
Severn Trent’s stock rose 40p to 2306p.
City experts were not expecting the Severn Trent share issue, but pointed out that the rally for the stock after the announcement was a clear sign it was well-received on the market. Usually, a share issue leads to an immediate slip in price, ahead of the increased supply in stock
Severn Trent to raise £1bn to help fund transformation plan
Henry Saker-Clark, PA Deputy Business Editor
Fri, 29 September 2023
Severn Trent is seeking to raise £1 billion to help support a transformation plan that is “expected to create 7,000 jobs” across the midlands.
The water supplier has launched a pre-emptive equity placing to start raising funds and stressed that the firm is “maintaining financial resilience”.
The utility firm said it plans to spend £12.9 billion in supporting its network over the next five-year regulatory period.
It said this will include £5 billion of investment focused on improving capacity and service beyond current levels, with £3 billion of this focused towards aiding the “natural environment”.
Liv Garfield, chief executive officer of Severn Trent (Veuve Clicquot/PA)
The plan comes amid a period of intense scrutiny over the water sector and renewed speculation over the potential for nationalisation in the industry.
Significant financial instability at debt-laden rival Thames Water drove calls for political intervention, raising questions over the financing of the industry, while firms have also come under pressure over environmental issues.
On Friday, Severn Trent said its new business plan will be submitted to regulator Ofwat on Monday following the equity raise.
The firm said the plan will help it towards a 16% reduction in leakage and a 30% reduction in spills from storm overflows, putting it on track to deliver the Government’s 2050 industry targets five years early.
Severn Trent also said the investments are expected to create up to 7,000 jobs directly in the business and supply chain.
Liv Garfield, chief executive officer at Severn Trent, said: “By 2030 we will have transformed our network to provide our customers with the very best service.
“At the heart of this ambition is a commitment to a sustainable future – from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth.
“At the same time, our £550 million affordability scheme aims to ensure no customer in our region needs to worry about affording their water bill.
“We’ve listened hard to our customers, not only will we make sure we keep building on our sector-leading track record, but we will also work to make our region proud of their water company.”
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