Severn/Dee customer swap sealed after both accept Ofwat’s licence modifications

Ofwat has amended the licences of Severn Trent Water and Dee Valley Water to formalise the realignment of the supply area of each with the English/Welsh border.

Severn Trent Water became the water supplier for Dee Valley Water customers in England, which includes 49,700 households and 4,000 business customers in Chester, as well as surrounding areas like Cheshire, Shropshire and the Wirral. Dee Valley Water, which was also granted a new wastewater licence, became the water and wastewater services provider to Severn Trent’s Welsh customers in Powys and Monmouthshire. Also yesterday, the refreshed Dee Valley took on its new name – Hafren Dyfrdwy.

The move followed both companies consenting to licence conditions proposed by Ofwat as part of the deal. These included:

  • modifying both licences to insert the most recent set of financial ring-fencing conditions;

  • modifying both licences to allow the price controls set at PR14 and at PR16 to be reflected across the new areas of appointment – under the principle that customers should benefit from the same commitments as the companies agreed at those times; and

  • modifying Dee’s licence to reflect the addition of in-period Outcome Delivery Incentives – “that is, to allow the ODIs set at PR14 to apply to customers in the Powys region to continue to apply when this area is transferred to Dee Valley Water”.

Severn Trent Water acquired Dee Valley Group, the ultimate holding company of Dee Valley Water, on 15 February 2017. Although they are still separate companies operating under separate licences, both Severn Trent Water and Dee Valley Water are part of the Severn Trent Plc group.