Severn Trent likely to be allowed to charge customers £60m extra

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Severn Trent may soon be able to charge almost 5 million customers an extra £60m in total on their water bills as a reward for exceeding its own customer service targets.

Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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20 Jul 2023

The water firm, which is listed on the FTSE 100, told investors on Wednesday that it was on track to get the multimillion-pound award this year through the water regulator’s incentive plan.

Ofwat’s scheme allows water companies to charge households higher bills as a reward for exceeding their performance targets, but demands discounts for customers if water companies fall short.

Severn Trent is likely to collect the reward from its 4.8 million customers – located in Birmingham and the wider Midlands region – over a number of years to avoid a sudden change to bills.

The company said it expected to make “at least” £50m for its “sector-leading performance” for customers. The pre-tax sum is calculated in 2017-18 prices, which today would mean a windfall of more than £62m or almost £13 per customer.

Households and businesses in the Midlands could notice a modest increase in