Southern Water submits record £7.8 billion Business Plan to Ofwat

In April, Southern Water set out on a Turnaround Plan to deliver short, sharp improvement in its operational performance by 2025. This was supported by significant new investment from Southern Water’s shareholders of £1.6 billion since 2021, who have not received a dividend since 2017. Southern Water are on track to deliver this in line with its aspirations.

Southern Water’s proposed Business Plan (Price Review 24) for the 2025-30 regulatory period sets an ambition beyond anything attempted by the company before. It will deliver major improvements in water resilience, wastewater treatment, and customer service, as well as enhancement and protection of our precious environment. To deliver this major and ambitious plan, customer bills will increase to pay for this future investment.

A record £7.8 billion has been outlined to deliver these benefits and address the challenges, creating an estimated 5,000 jobs across the region and representing around £3,500 per household. The issues Southern Water are tackling are long term, so this Business Plan is the first major step in its longer-term strategy to 2050.

This includes the single largest investment made to date of £3.3 billion in improving the environment, which will see Southern Water reduce its impact on rivers by cutting the amount of water it take from them, build new longer-term water sources, upgrade Southern Water’s largest water and wastewater treatment sites, boost water quality, reduce storm overflows, and support new housing developments.

Southern Water face major challenges in they region that they need to plan for and manage in the longer-term, from increased consumption through an expected population growth of 3.2 % over the next 10 years, approximately 2.2 million more people, to the impact of climate change with more volatile weather and risks of drought. Collectively, Southern Water need to urgently reduce pollution and the amount of water it takes from the environment.

Southern Water understand the burden the rising cost-of-living is having on customers. Southern Water will mitigate the effects of bill increases by spreading the costs over a five-year period. Southern Water are also extending its social tariff to support 50% more customers than they do currently so more customers can get up to 45% off their bills, increasing its hardship fund fourfold, and extending its Priority Services Register.

Key investment highlights include:

– £3.4 billion to be invested in water supply services. Including:

– £320m to upgrade Southern Water’s four largest water supply works to improve resilience benefitting 62% of its customers.

– Reducing the amount of water Southern Water take from the environment to supply as drinking water – by 50 million litres a day by 2030, a reduction of 10% from 2022.

– The construction of water recycling plants and new pipelines to help Southern Water deliver more than 189 million litres of extra water per day by 2035.

– £4.1 billion in Southern Water’s wastewater services. Including:

– £682m to reduce its use of storm overflows by up to 20% by 2030 across 179 priority sites.

– Reduce pollution incidents by 50% and eliminate serious pollution incidents by installing new mains and increasing power resilience at Southern Water pumping stations

– £600m to upgrade 38 wastewater treatment sites to remove harmful nutrients and improve the quality of water Southern Water put back into the environment and help accommodate over 60,000 new homes by 2030.

– £348 million to provide trusted and easy-to-use customer services through investing in a new customer relationship management and billing system – making Southern Water’s services more responsive, providing easier to access for all its customers.

Southern Water’s plan has been developed following extensive input from 25,000 customers to ensure thy understand and address what matters most to them. Southern Water will soon be publishing a detailed proposal on how they will tackle storm overflows in 179 priority bathing and shellfish sites across our region. Central to this is transparency and monitoring, and Southern Water remains at the forefront of leading technology solutions, including its digital monitors and Beachbuoy, its near real-time 24/7 storm overflow activity tool.

Southern Water believe its long-term investment programme strikes the right balance between customers’ and communities’ priorities, affordable bills and supporting Southern Water’s ability to deliver significant improvements.

Lawrence Gosden, Southern Water’s CEO, said: “Our proposed record £7.8bn investment over 2025-2030 aims to build on the foundations of our turnaround plan where we promised to deliver a short, sharp, ambitious performance improvement by 2025.

“The investment will ensure significant improvements to the environment in our region including improving water quality in 1,000km of river by upgrading our wastewater treatment works. It will also deliver major improvements in water resilience, in the way we treat wastewater, enhance customer service and increase the number of jobs in our region by an estimated 5,000.

“We know that our past performance has not lived up to our customers’ and our regulators’ expectations. We acknowledge those failings and are doing everything we can to address them. Customer bills will increase but we will mitigate the effects by spreading increases over the regulatory period and significantly increasing our support for vulnerable customers.

“This is right for our environment, communities, investors, and above all for our customers. We look forward to working with Ofwat on their draft determination of our plan next year.”

Our full PR24 Business Plan submission can be viewed online.