17th Apr 2014 10:38
LONDON (Alliance News) - Water companies Severn Trent PLC and United Utilities Group PLC Thursday said they will resubmit their business plans for the period 2015-20 after regulator Ofwat said their proposals on risk and reward were not in line with its expectations.
UK water companies submitted business plans at the end of 2013 setting out their proposed investments plans for the next five years and how much they plan to charge customers.
At the end of the process, Ofwat marked the plans as either enhanced, standard or resubmission. Only two companies - Pennon Group PLC-owned South West Water and Morgan Stanley and M&G Investment-owned Affinity Water - were granted enhanced status meaning they "pre-qualified" to adopt Ofwat's risk and reward guidance, enabling them to benefit from a fast-track approval process.
Earlier this month Ofwat said it required more evidence from Severn Trent and in particular on one element of its wholesale water costs namely the Birmingham strategic resilience project, which accounts for GBP255 million of total expenditure over the five year period.
"We need to ensure there is sufficient time and opportunity to fully engage with Ofwat on these evidence requests and on the case for the resilience project, including the importance that our customers place on this project, the support that our customer challenge group has provided and our assessment of the risks of not proceeding with the project," Severn Trent said in a statement.
Severn Trent said it will re-submit its plan to Ofwat on June 27 to receive an August draft determination. United Utilities also expects to submit its revised business plan by June 27.
Severn Trent shares were trading at 1,793.00 pence Thursday, down 7.00 pence or 0.4%. United Utilities was trading at 769.46 pence, down 5.54 pence or 0.7%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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