Chief executive, Tony Wray, highlighted challenges including maintaining and improving the reliability of the network, significantly reducing carbon emissions, improving operational performance and keeping prices at affordable levels.

In his firm’s new report, Changing Course, he proposes a number of changes for how water companies operate and for the policy and regulatory frameworks which have existed since privatisation 20 years ago.

Without such changes, he believes, customers will face higher bills, carbon emissions will rise, and the financial sustainability of the industry will become more uncertain.

However, adopting Severn Trent’s proposed changes would save the industry over £10bn over the next 20 years and reduce carbon emissions by 13%, compared to the current course.

By passing on these efficiencies to customers, average bills could be 11% lower than they would have been otherwise.

The proposals for addressing the challenges ahead include:

A review of the current regulatory framework including a more efficient price setting process involving customers, and a more flexible approach to implementing the EU Water Framework Directive.

Greater support for competition and trading within the industry allowing for more efficient distribution of water resources, benefitting customers, stakeholders and the environment.

Greater policy support for energy efficiency which rewards those companies which significantly reduce carbon emissions, and a consenting regime which recognises the trade-off between higher absolute standards and curbing increases in carbon emissions.

Mr Wray said: “The water industry in England and Wales has reached a pivotal point.

“While the current regulatory model has worked very effectively since the privatisation of the industry, now is the time for change.

“Around £80bn has been spent over the past 20 years to improve and maintain networks while also delivering rising standards, largely financed via ever-increasing levels of debt.

“As an industry we are only half way there with a further £96bn of investment projected over the next 20 years.”

“In order that the industry can continue to fund this investment while also addressing new challenges such as rising carbon emissions, it is now essential that we make significant changes to the policy and regulatory framework to ensure a sustainable future.”

Changing Course – Delivering a sustainable future for the water industry in England and Wales is available on Severn Trent’s website at

Luke Walsh

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