REG - Pennon Group PLC - SWW incentive to help reservoir levels recover

PennonAnnouncement

11/11/2022 07:16

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RNS Number : 0639G  Pennon Group PLC  11 November 2022

PENNON GROUP PLC

11 November 2022

South West Water to launch pioneering customer incentive scheme to help
reservoir levels recover in Cornwall

South West Water is today announcing 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 £30 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.

If Colliford reservoir recovers to 30% capacity by 31 December 2022, the
payment of the financial incentive to customers would result in a reduction to
(non-underlying) revenue of c.£10 million in H2 2022/23. In addition, we
would also anticipate lower customer demand which would be reflected in
underlying revenue as customer behaviour changes.

Investing in resilience

South West Water is also accelerating initiatives of up to £20 million to
help secure supplies. This includes investment in Hawkstor reservoir,
purchased earlier in 2022 and work at three other water sources in Cornwall.
Alongside providing over 45,000 water saving devices to customers, South West
Water will continue with targeted operational activities such as customer side
leak repairs. The new capital investments will be reflected in South West
Water's regulatory capital value.

The Group is also pursuing longer-term investments to secure future supplies,
including the new Cheddar 2 reservoir in the Bristol region which will be
included in South West Water's forthcoming Water Resources Management Plan.

As part of South West Water's Green Recovery investment to 2025, over £27
million will be invested in the water grid, improving our ability to move
water throughout the region to where it is needed the most.

Half Year Results 2022/23

Pennon will report half year results on 30 November 2022. The Group
anticipates minimal impact on Pennon's half year 2022/23 results as a result
of these initiatives, with the income impact expected to be reflected in
second half performance and the full year 2022/23 results.

A presentation of the half year results hosted by Susan Davy, Group Chief
Executive and Paul Boote, Group Chief Financial Officer, will be available at
08:30am (GMT) on 30 November 2022, followed by a live Q&A conference call.

Further details will be available on the Pennon Group website
www.pennon-group.co.uk/investor-information
(http://www.pennon-group.co.uk/investor-information)

 

For further information, please contact:

 Pennon Group plc                                  +44 (0) 1392 443 168
 Paul Boote         Group Chief Financial Officer
 Jennifer Cooke     Head of Investor Relations

 Media Enquiries - FGS Global                      +44 (0) 20 7251 3801
 James Murgatroyd
 Harry Worthington

 

Additional information

Pennon Group

Pennon Group is the parent company of South West Water (incorporating
Bournemouth Water following acquisition in 2015), Bristol Water and Pennon
Water Services.

Through its water business subsidiaries, it provides over 870 million litres
of clean, safe, and reliable drinking water every day to a population of 3.5
million, swelling to over 10 million in peak summer periods.

South West Water

South West Water provides services to customers across Cornwall, Devon, the
Isles of Scilly, and parts of Somerset, Dorset, Hampshire and Wiltshire.

Over 90% of South West Water's supply comes from surface water sources - such
as rivers and reservoirs, with the remainder coming from groundwater sources,
such as springs, wells and boreholes.

In 2021, South West Water launched a £75,000 a year Water-Saving Community
Fund, which supports community groups and registered non-profit organisations
who can provide a benefit to the community by saving tap water and
demonstrating a reduction in water use.  Last year, South West Water funded
22 projects which contributed to a combined estimated yearly saving of 59
million litres of water.

Supplies in the majority of Devon, and the Isles of Scilly, and the
Bournemouth Water region remain unaffected at this time.

Bristol Water

Bristol Water was acquired by Pennon in June 2021, with clearance granted by
the Competition and Markets Authority in March 2022 for the merger with South
West Water.

Bristol Water operates a reservoir in Cheddar, known as Cheddar 1, which was
built in 1937. In June 2014 the company secured planning permission for a new
reservoir, Cheddar 2, alongside the existing reservoir. Cheddar 2 would be
supplied by surplus winter flows in the Cheddar Yeo river. In 2018, the
Company's previous owners determined the reservoir was not required, the
planning permission lapsed.  Pennon Group now intends to re-apply for this
permission after discussions with Government.

Supplies in the Bristol Water region remain unaffected at this time.

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