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(Alliance News) - Severn Trent PLC outlined long-term investment plans at a capital markets day on Wednesday, setting out strategies for infrastructure upgrades, efficiency improvements, and regulatory outperformance.
The Coventry, England-based water utility said it expects to exceed its performance targets by more than GBP300 million during the AMP8 regulatory period. This extra value will come from efficiency improvements and financial rewards for meeting or surpassing regulatory goals.
Of this amount, up to GBP50 million will come from specific project targets, while the rest will be earned through incentives for delivering better services.
The UK regulatory cycle is broken up into five-year periods known as AMP, or asset management plan, periods. The current one is AMP7, running from 2020 until this month, while AMP8 starts on April 1 and runs to March 31, 2030.
Severn Trent expects most of its outperformance to materialise in the later years of AMP8, with at least GBP25 million in ODI rewards forecast for financial 2026.
Severn Trent said it is ramping up investment to improve its infrastructure and operations. The company will allocate an additional GBP50 million to infiltration programmes designed to prevent groundwater from entering its sewer network, which says will reduce processing and treatment costs.
It also plans to upgrade over 400 pumping stations and has hired a dedicated team to prevent pollution incidents. Severn Trent added further investment is being made in its Waste Operational Control centre, which uses advanced "monitoring technology to detect and prevent waste incidents before they occur".
The company highlighted that it has installed 1,500 storm overflow interventions in the past year and remains on track to halve spills by 2030. Severn Trent also reiterated its goal of reducing leakage by more than 30% over the decade.
Looking beyond the current regulatory cycle, the company said it sees this as the beginning of a multi-decade investment programme. It expects real regulatory capital value growth of 45% in AMP8 and projects an average growth rate of around 20% per AMP over the next 25 years.
Shares in Severn Trent were down 3.3% at 2,428.78 pence in London on Wednesday morning.
By Eva Castanedo, Alliance News reporter
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