Pennon Group PLC reported trading is in line with expectations as it unveiled a £2.8 billion investment package between 2025-20230 at South West Water.
It became the latest utility to submit business plans to Ofwat, following Severn Trent on Friday.
The package of capital investments outlined are built around addressing four key challenges: storm overflows and pollutions, water quality and water resilience, delivering Net Zero and environmental gains, whilst ensuring bills remain affordable for all.
Updating investors on trading for the six months ended 30 September 2023, Pennon said it was on track to deliver a significant environmental investment plan with capex of over £400 million for 2023/24 and well positioned to continue to deliver a cumulative doubling of return on regulated equity base returns to 2023/24.
The firm said efforts to improve its environmental performance are having a positive impact, and as result Pennon anticipates a reduction in the net outcome delivery incentives penalty for 2023/24.
Given the current macro-environment, the company anticipates higher regulated capital value (RCV) growth reflecting updated forward assumptions on inflation.
Factoring in this, it anticipates an opening RCV of c.£5.4 billion at the beginning of the next regulatory period (2025-30), around £200 million additional value on previous guidance which would broadly equate to a c.2.5% reduction in gearing.
Pennon expects gearing to remain within its well-established range of 55-65%.