Severn Trent will cut water bills to lowest in England
Severn Trent has confirmed a five-year plan that will see its water rates cut to the lowest in England.
By 2015, average annual water and sewage bills issued by the company will fall by 4% to £291 – the equivalent of a £13 reduction on this year's rates.
It will mean bills paid by customers in Leicestershire will be £52 cheaper than the national average.
Households and businesses will start seeing a reduction in prices from April, when the average annual bill falls to £301 – £3 less than this year.
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It comes after the utilities giant accepted a ruling from water regular Ofwat to cut prices.
Severn Trent supplies tens of thousands of homes and businesses in Leicestershire and Rutland.
Despite reducing bills, it has pledged to invest £2.5bn improving the water network over the next five years.
Customer services director Martin Kane said: "Over the next five years, we aim to ensure that our customers continue to receive a high-quality, cost-effective service through investment in our processes and networks.
"We will continue to offer high standards and great people delivering the service, but now combined with the lowest average charges available in England and Wales."
Improvements in Leicestershire will see £3.5m spent over the next two years on renovating the county's sewage pumping stations and carrying out work to alleviate the risk of sewers flooding.
Severn Trent has also pledged to continue treatment work to further improve the quality of drinking water.
It will be paid for by axing 250 jobs at its Birmingham head office.
Shareholders will also be hit with a one-off 10% reduction in their dividend pay-out next year.
Its five-year plan, published yesterday, comes in response to water regulator Ofwat's decision last November on the prices water and sewerage companies could charge customers between 2010 and 2015.
Ofwat told Severn Trent that by 2015 its average water and sewage bill had to be £291.
According to Ofwat's figures, the industry average by then will be £343, with the most expensive bills being sent out to customers of South West Water who on average will have to pay £483.
These forecasted prices do not include inflation so are likely to be marginally higher.
Ofwat said it had demanded Severn Trent and other water companies reduce bills in response to demand from customers. It said more than 1.5m people would benefit from "more secure" water supplies as a result of Severn Trent's investment program.
Ofwat chief executive officer Regina Finn said: "When setting limits on prices, we listened to customers in the Midlands. They told us that their priority is safe, reliable water supplies at a reasonable cost. We've challenged Severn Trent to deliver that.
"This is not just about keeping bills down, but about what customers get for their money."
Severn Trent made a pre-tax profit of £208.2m in the first half of the financial year.