SEVERN TRENT PLC - OFWAT Publishes Draft Determination

Thu. July 23, 2009; Posted: 06:17 AM

Jul 23, 2009 (PR Newswire Europe via COMTEX) -- SVTRF | Quote | Chart | News | PowerRating -- e>Ofwat publishes Draft Determination Severn Trent Water has today received Ofwat's Draft Determination for the period 2010 to 2015 ("AMP5"). Tony Wray, Chief Executive, said: "The Draft Determination is a complex document and there is a lot of detail to consider. We will be carefully and thoroughly reviewing all of its content and conclusions before responding to Ofwat in September 2009. This is the next step in our process and formal representations in preparation for the Ofwat Final Determination in November 2009." The Draft Determination responds to the Final Business Plans submitted by all water companies in April 2009. Our plan includes key service and environmental improvements, informed by customer priorities and extensive `willingness to pay' research, while maintaining the drive for lowest bills in the water industry. It was submitted as a balanced, holistic and robustly justified business plan for the five-year period. An overview of the Severn Trent Water Final Business Plan is available on the Severn Trent Water website ( www.stwater.co.uk/fbp). The publication of the Draft Determination is an important step in the Price Review process, which will culminate in final proposals being published by Ofwat in November 2009 and new price limits taking effect in April 2010 (for the 2010 to 2015 period). The Ofwat Draft Determination proposes the following for Severn Trent Water: * A proposed AMP5 capital investment programme of GBP2.2 billion (net of efficiencies, grants and contributions at 2007/08 prices). * A proposed cost of capital of 4.5% real, post tax. The component parts of the assumed cost of capital are; real post tax cost of equity of 7.1% (AMP4 7.7%), real post tax cost of debt of 2.6% (AMP4 3.0%) and 57.5% gearing (AMP4 55%). * A proposed fall in average household bills of 8% in real terms (annual average of 1.5%) by 2015. Enquiries: Jonathan Davies Investor Relations Severn Trent Plc 0121 722 4295 Andrew Marsh Public Affairs Manager Severn Trent Plc 0121 722 4555 Mal Patel or Peter Hewer Tulchan Communications 0207 353 4200 END

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