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Ofwat faces Severn Trent price appeal


WATER COMPANY Severn Trent this week threatened to take regulator Ofwat to appeal if today's price determination falls much short of what it has asked for.

Outgoing Severn Trent chief executive Robert Walker said that investors were under the misapprehension that the company came out well from draft determination discussions with Ofwat.

But he warned that following 'robust' discussions with Ofwat there were a number of operating and capital works costs that Severn Trent is worried it will not be able to meet without raising customer charges.

It is understood that Ofwat is likely to let Severn Trent raise prices by between 16% and 24%. The firm wanted to increase bills by over 30%.

The decision on whether to appeal or not will be taken in January by Walker's successor, Colin Matthews.

A spokesman for industry body Water UK said that an appeal by one of the major water and sewerage companies would be 'far from commonplace'.

But concern about the affordability of major infrastructure upgrades as well as operating expenditure was raised right across the water sector, when Ofwat released its draft determination in August, he added.

In 1999 two small water-only companies successfully appealed Ofwat's determination.

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