Severn Trent was told by Ofwat, the industry regulator, that it had to find cost savings and efficiencies of £372 million over the five years to March 2020. The company announced yesterday that it had already identified these and a further £50 million — and there is undoubtedly more to come.
That is how the regulatory regime works. Severn Trent was seen as the least efficient in delivering water, if among the better at treating waste, and was given tough targets to meet. These serve as an incentive, because any savings over and above those targets can be shared with customers in the form of lower water rates, and with shareholders in the form of dividends.
United Utilities has this week indicated that it is