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(Alliance News) - Pennon Group PLC on Friday warned of a GBP10 million hit to revenue, after its South West Water business launched its "Stop to Drop" scheme.
The Exeter-based water utility and waste management firm said that South West Water is announcing on Friday a "first of its kind" customer incentive scheme, asking everyone in Cornwall to come together to help recharge reservoir levels, as part of building longer term resilience.
"Stop the Drop" will see customers offered a financial incentive to encourage them to reduce consumption in exchange for a rebate on their bill. If Colliford reservoir recovers to 30% by 31 December 2022, customers in Cornwall will receive a GBP30 rebate on their bill.
"2022 has seen the lowest level of rainfall in the South West for 130 years, which has been combined with a very hot summer and elevated customer demand. Whilst the majority of South West Water's customers have remained unaffected during this period, significant pressure has been placed on water resources in parts of the region, with river flows and reservoir levels in Cornwall reaching historically low levels this summer," Pennon said.
However, it warned that if Colliford reservoir recovers to 30% capacity by December 31, the payment of the financial incentive to customers would result in a reduction to non-underlying revenue of around GBP10 million in the second half of financial year 2023.
Further, Pennon anticipates that lower customer demand, which would be reflected in underlying revenue, as customer behaviour changes.
Pennon plans to report its half year results on November 30, 2022.
The company anticipates minimal impact on Pennon's half year results as a result of these initiatives, with the income impact expected to be reflected in second half performance and the full financial year 2023 results.
Shares in Pennon were up 0.6% at 945.50 pence each in London on Friday morning.
By Sophie Rose; sophierose@alliancenews.com
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