Investing £765 million to deliver customer and environmental outcomes

The £765 million additional investment we are making over the 2020–25 period beyond the scope of our final determination will help to accelerate environmental benefits, improve performance for customers, and deliver growth in our regulatory capital value (RCV), while maintaining gearing within our target range.

£265 million of this investment is delivering projects that have been agreed with our regulator to help deliver environmental and customer outcomes. These projects are approved additions to our base investment programme, including Green Recovery investment and the Water Industry National Environment Programme (WINEP), and are subject to regulatory mechanisms.

A further £250 million is being targeted at improving performance for customers, including £100 million investment in Dynamic Network Management, a Systems Thinking implementation in our wastewater network that is driving improvements in sewer flooding and pollution performance, as well as projects that will improve water quality

This investment is supported on a business case basis, and will deliver improved customer outcome delivery incentive (ODI) performance in the current period. The sustainable performance improvements it will deliver also help to support better service for customers, and therefore, better ODI performance, in future periods, providing additional benefit and creating long-term value for all stakeholders.

The remaining £250 million will help us improve environmental outcomes, such as accelerating implementation of the Environment Act 2021, including delivery of the commitments we set out in our Better Rivers: Better North West plan, and delivering improved water quality and resilience.

This is reinvestment of outperformance we have earned, and is subject to regulatory mechanisms. As a responsible company, we believe in the importance of sharing our successes for the benefit of all our stakeholders. This is in line with the approach we have taken historically, sharing over £600 million in 2010–20, and that investment has helped us to deliver the performance improvements we have achieved to date.

As well as delivering significant environmental and customer benefits, this additional investment is contributing to higher growth in our RCV, which is now expected to grow by over 10 per cent more on a nominal basis over the 2020–25 period than we expected at the beginning of the period. This, together with our financial strength and balance sheet headroom, means we expect gearing to remain within our target range of 55 to 65 per cent, retaining financial flexibility and resilience.