Severn Trent PLC SVT considering Ofwat proposal to increase ODI cap (0373G)
November 01 2018 - 7:04AM
UK Regulatory
TIDMSVT
RNS Number : 0373G
Severn Trent PLC
01 November 2018
LEI: 213800RPBXRETY4A4C59
1 November 2018
Severn Trent Plc considering Ofwat's proposal to increase
Customer ODI cap
Earlier this year Severn Trent Plc applied to lift the cap on
its waste water customer ODIs(1) , in line with the methodology
prescribed by Ofwat in PR14. This application followed a survey of
over 4,000 customers, of whom 72% supported the principle of
uncapping, reflecting the strong benefits that a culture of
incentivisation continues to deliver for our customers and the
environment.
We note two items from Ofwat's publication 'Draft determination
of in-period ODIs for 2018', released this morning:
1. An adjustment to our 2017/18 supply interruptions customer ODI performance, resulting in a net outperformance payment across all customer ODIs for 2017/18 of GBP72 million(2) in 2012/13 prices(4) pre-tax.
2. A proposal to increase the AMP6(3) cap on our waste water
customer ODIs from 2.0% to 2.6% of Regulated Equity, which would
increase the potential AMP6 incentives by c. GBP56 million in
2012/13 prices(4) pre-tax. Ofwat's proposal is to also reset
performance level targets for internal and external sewer flooding
and pollutions to the level achieved in 2017/18, and reduce the
incentive rate for external sewer flooding by 85%, for the
remaining two years of the AMP.
We will now assess the proposal outlined in the consultation
document and respond to Ofwat in due course. We will update the
market following this consultation process.
(1) Customer Outcome Delivery Incentives
(2) Previously announced as GBP80 million in 2017/18 full year
results
(3) Asset Management Period 6, from 2015 to 2020
(4) Outperformance payments and penalties are recognised in
revenue with a two year lag, inflated from 2012/13 prices using
RPI
Enquiries
Investors & Analysts
Richard Eadie Severn Trent Plc +44 (0) 7889 806578
Head of Investor Relations
Rachel Martin Severn Trent Plc +44 (0) 7824 624011
Investor Relations Manager
Media
Press Office Severn Trent Plc +44 (0) 247 771 5640
Jonathan Sibun Tulchan +44 (0) 207 353 4200
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to
be, 'forward-looking statements' with respect to Severn Trent's
financial condition, results of operations and business and certain
of Severn Trent's plans and objectives with respect to these
items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
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'should', 'expects', 'believes', 'intends', 'plans', 'projects',
'potential', 'reasonably possible', 'targets', 'goal', 'estimates'
or words with a similar meaning, and, in each case, their negative
or other variations or comparable terminology. Any forward-looking
statements in this document are based on Severn Trent's current
expectations and, by their very nature, forward-looking statements
are inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance and no assurances can be given that the forward-looking
statements in this document will be realised. There are a number of
factors, many of which are beyond Severn Trent's control that could
cause actual results, performance and developments to differ
materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to: the
Principal Risks disclosed in our latest Annual Report and Accounts
(which have not been updated since the date of its publication);
changes in the economies and markets in which the group operates;
changes in the regulatory and competition frameworks in which the
group operates; the impact of legal or other proceedings against or
which affect the group; and changes in interest and exchange
rates.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to Severn
Trent or any other member of the group or persons acting on their
behalf are expressly qualified in their entirety by the factors
referred to above. No assurances can be given that the
forward-looking statements in this document will be realised. This
document speaks as at the date of publication. Save as required by
applicable laws and regulations, Severn Trent does not intend to
update any forward-looking statements and does not undertake any
obligation to do so. Past performance of securities of Severn Trent
Plc cannot be relied upon as a guide to the future performance of
securities of Severn Trent Plc.
Nothing in this document should be regarded as a profits
forecast.
This document is not an offer to sell, exchange or transfer any
securities of Severn Trent Plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
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END
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