Pennon : Draft Regulatory Approval For C.£130 Million Accelerated Infrastructure Investment For South West Water

Pennon Group welcomes the announcement by Ofwat this morning outlining a potential c.£130 million of additional, accelerated investment for South West Water¹ , enabling the early delivery of benefits for our customers and the environment. We will now review and feedback on Ofwat's proposals over the consultation period to 24 April 2023.

These new investments will be delivered over the period to 2030, with £52 million to be accelerated into the period to 2025. This is in addition to our existing 2020-25 business plan and Green Recovery commitments, and ongoing reinvestment of outperformance in our WaterFit and water resilience initiatives. This brings our total allowed investment programme to 2025 to c.£1.45 billion. The additional investment is well supported by our customers and will not impact customer bills in the current regulatory period.

Of the total £98 million wastewater accelerated investment outlined to 2030, £35 million will fund storm overflow and nutrient neutrality schemes to 2025, further supporting the delivery of our WaterFit plans, alongside growth and development in our region.

We are already making good progress through our WaterFit programme on improving raw water quality across our catchments as we work towards our 2025 river and coastal water quality commitments including:

• Reducing releases from storm overflows to an average of 20 per asset, per year by 2025
• Reducing by one third the impact we have on rivers - improving RNAGs² from 19% to 12% by 2025.

A total of £32 million accelerated water efficiency investment has been outlined to 2030, of which £17 million will be delivered to 2025 to support customers in Cornwall and Bristol reduce their usage, alongside cutting leakage from customers' pipes.

Given the ongoing drought across the South West, securing resilient water supplies for current and future generations remains of significant importance, and there remains more to do. Alongside our 'Save Every Drop' customer campaign, we are working at pace to accelerate investment in a suite of innovative solutions, including the activities noted above, whilst investigating the potential for further transitional investments.

Susan Davy, Pennon's Chief Executive Officer commented:

Today is positive news for the economic health of the greater South West as we look to go further and faster with our ambitious investment plan. Getting the green light from Ofwat to bring forward a number of schemes ahead of the next price review will enable us to continue going further and faster to reduce the use of storm overflows, protect natural ecosystems, our beaches and rivers and support house building.

Alongside our existing £75 million investment to boost water resilience with innovative solutions such as repurposing redundant quarries and mines to store water, and desalination, we are also working at pace to ensure customers and visitors to our region have continuity of supply.

There's never been a more important time to invest to offset the impacts of drought, climate change, population growth and increasing demand for our services.

¹The merger of Bristol Water into South West Water's licence completed on 1 February 2023. The total investment outlined covers the South West Water and Bristol Water areas.

²Rivers Not Achieving Good ecological status (RNAG)

For further information, please contact:

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

Media Enquiries
James Murgatroyd - FGS Global
Harry Worthington
+44 (0)207 251 3801