Severn Trent praises Cunliffe conclusions as positive

Severn Trent has published its initial take on the Cunliffe report. Management sees the review as “significantly positive” for the sector and for Severn Trent, and identified what it sees as four key messages from the report:

1. The case for long-term growth has been strengthened. 

2. There is a commitment to provide a fair risk/return package for investors whilst maintaining the opportunity to outperform. 

3. A supervisory and regional framework will provide a company-specific approach and ‘constrained discretion’. 

4. There is a positive change in the regulatory framework for investors.

The company also sees the continued commitment to an inflation-indexed asset base as positive. The Government, it said, must take on the recommendation to “shift the sector rhetoric”.

Severn Trent commented that it is on track as a company to meet Government’s pledge to reduce all spills from water companies by 50% by 2030.

Management also highlighted paragraphs from the Cunliffe report that accord with its particular operational focus such as: the use of transition spend; continued use of Outcome Delivery Incentives; enhanced Price Control Deliverables; regional planning relationships; and the introduction of a public benefit condition in water company licences.