SOUTH WEST WATER A summary of our Business Plan Submission to Ofwat - April 1999

OVERALL STRATEGY FOR THE AMP3 PERIOD AND TOP 5 STRATEGIC OBJECTIVES Our strategy will deliver substantial benefits to customers, our region and its environment within acceptable price limits, including: * average bill increases of 2.4% (real) by 2004/05 from 1999/00 and average K factors of 3%. * improved quality of service to customers through telephone, written and personal contacts. * delivery of all enhanced environmental and quality obligations laid down by Government and its agencies. * serviceability of assets maintained, including leakage held below its economic level. * ongoing operating and capital efficiencies targeted to maintain SWW's position amongst industry leaders.

PROPOSED PRICE LIMITS & EFFECT ON AVERAGE BILLS								TOP 5 QUALITY IMPROVEMENTS IN 2000-2005 PERIOD
								1. Mains network improvements including rehabilitation of 2,246 km of water mains (15% of total) to reduce water discolouration, replacement of 42,165 lead pipes and improvements to drinking water taste and odour.
		2000 -01	2001- 02	2002 -03	2003- 04	2004- 05		2. Coastal waters improvements, including completion of 'Clean Sweep' and Urban Waste Water schemes. The programme is centred on constructing 25 new coastal sewage works, upgrading 14 other coastal works, improving 29 estuary sewage works and closing all untreated sea outfalls by 2003, to protect bathing waters and the achievement of another 50 Guideline waters.
1	Proposed Price Limit (Water Service)	1.0	1.0	3.5	5.3	5.2		3. River improvements, including upgrading 245 combined sewer overflows and 46 inland sewage treatment works to meet 42 River Quality Objectives, the protection of 3 sensitive waters and 2 SSSIs, and 4 sustainability requirements.
2	Average Household Bill (today's prices)	118	118	120	125	129		4. Remove 282 properties from the risk of sewage flooding.
3	Average Household Bill paid	121	123	129	137	145		5. Improve the timeliness and quality of responses to customer contacts.
1	Proposed Price Limit (Sewerage Service)	1.0	1.0	3.5	3.2	3.2
2	Average Household Bill (today's prices)	233	230	232	233	235
3	Average Household Bill paid	238	240	248	256	264

PROJECTED EXPENDITURE NEEDS			Annual average for the AMP3 period (£/property/annum)		WHAT IS DRIVING THE CHANGES IN BILLS		£
1	Total Operating Expenditure - annual average		131		Average household bill in 1999-2000		356
2	Total Capital Maintenance Expenditure - annual average		266		Less	(1) passing on past out-performance	-28
3	Total Capital Enhancement Expenditure - annual average		147		Plus	(2) challenging targets for future efficiency improvements	-14
						(3) the impact of improvements in water quality	49
RETURN CAPITAL						(4) improvements in service performance	1
Return on capital - (post tax) (%)						(5) Maintaining security of supplies to all customers	0
					Average household bill in 2004-2005		364

For further information contact : www.south-west-water.co.uk