(Alliance News) - Pennon Group PLC said Friday its South West Water business has accepted water regulator Ofwat's final determination for the period from 2020 to 2025.
The water utility and waste management firm confirmed it will not refer the decision to the UK Competition & Market Authority.
"Importantly for customers, by 2025 South West Water bills will be lower than they are today and lower than they were 15 years earlier," Pennon added.
In December, Ofwat completed its price review for the period from 2020 to 2025, unveiling a GBP51 billion investment programme by UK utilities for the improvement of services and the environment.
Ofwat said that of that GBP51 billion spending plan for the next five years, GBP13 billion will go towards providing more resilient services and an improved effect on the environment, in the face of climate change and growing population.
The GBP13 billion also will be used to construct a new reservoir in Hampshire and a pipeline connecting water supplies from North Lincolnshire to Essex.
There will also be a reduction in average bills by around GBP50 per year before inflation, achieved by achieving greater efficiency through lower financing costs.
Key elements of the determination includes a post-tax real cost of capital for the industry of 1.9% on an retail prices index basis. Pennon also noted the final determination includes total expenditure of about GBP2 billion, which is consistent with the company's draft proposal is April 2019.
Pennon said the final determination for South West will now be taken into the group's strategic review - which includes announcing a new dividend policy in its financial 2020 annual results, scheduled for June 4.
Shares in Pennon were 0.3% higher in London on Friday morning at 1,144.09 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Pennon (PNN)