Southern Water has set out a £4 billion investment plan for 2020-25 with the submission of its AMP7 buisiess plan to water industry regulator this morning.

Launching the plan, the water company said that 25 years from now it will have lost a third of its water sources through climate change, seen a reduction in the amount of water it is allowed to take from rivers and underground sources, and its population will have grown by 15%.

Without action, Southern Water is predicting a supply and demand deficit by 2030 - equivalent to around 50% of current supply.

Stakeholder engagement on the plan included consulting directly with over 42,000 customers, local and regional stakeholders and global experts, together with insight from broader engagement with more than one million customers.

The PR19 plan is proposing a significant increase in investment from £3.2 billion in AMP6 to £4 billion in AMP7 - whilst at the same time reducing bills by more than 3% in real terms for water and wastewater customers.

With 43 specific performance commitments (PCs) designed around customer priorities, the plan includes the aim of reducing average consumption to an industry-leading 100 litres per person per day by 2040. and working with Water Resources South East (WRSE) on the joint implementation of the Havant Thicket resilience scheme.

Commenting on recent problems, the plan says:

"However, we also recognise historically poor performance and recent failings, which have fallen short of the expectations of our customers, regulators and other stakeholders. In early 2017, with the appointment of our new CEO and Chairman, we launched a complete restructure of our Executive Management, and subsequently, have substantially expanded our Board to ensure we have the capabilities to drive, at pace, the significant changes we need."

The plan has also added to Ofwat’s three pillars of resilience in the round of Operational, Corporate and Financial with two further pillars, Environmental and System of Systems, which are described as “critical to the South East.”

Southern Water said that water and wastewater services are fundamentally important to energy generation, food production, housing development, environmental protection, tourism and other vital industries and services in the region which are in many aspects connected with each other, creating “an as yet informal, regional system of systems.”

Other features of the plan include:

• building new treatment works at Brighton and Thanet
• replacing 30 service reservoirs with eight new ones
• investing in an integrated and smarter water network
• installing 2,500 smart water quality sensors by 2030
• replacing 330 kilometres of water mains by 2025
• roll out of one of Southern’s largest-ever environmental programmes of more than £800 million to improve water quality in 537 km of river water and seven additional bathing waters across its region
• 40% reduction in pollution incidents from a 2016 baseline

Southern Water said that its intention in the near term is “to become brilliant at the basics” – the utility will accelerate improvement in areas where it is not strong, and steadily enhance those where it is.

The water company added that bluewave, a new approach to transformational and disruptive innovation, is central to its AMP7 strategy.

Sothern Water is also in the process of a fundamental restructuring of its finances which will result in a substantial increase in the equity of the company. The utility is also targeting a reduction in gearing to 70% or less – achieved by shareholders injecting around £700 million of additional equity.

The restructuring will be complete before the beginning of AMP7. Click here for more information about the plan