Severn Trent warns customers could struggle to pay bills

Severn Trent warns customers could struggle to pay bills

Severn Trent warned today that more customers could struggle to meet their water bills as more evidence emerged that Britons are feeling the pinch in the economic downturn.

The water and waste water group said it was closely monitoring customer debt and cash collections and the issue was a "risk". Bad debts are normally around 2% of turnover, the company said.

In its interim management statement, Severn Trent said: "Whilst we have not experienced any material deterioration over the period to date, this remains a risk to our outlook over the remainder of the year."

The company said overall trading from the beginning of April until today had been in line with expectations. Prices had increased by just over 5% in April while consumption was continuing to decline across its commercial users and households on water meters.

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Severn Trent said it expected the reduced consumption would have an impact of between £12m and £14m on revenue in this financial year.

It said that, despite rising energy and other commodity prices, it expected to beat the targets on operating costs set by industry regulator Ofwat, by around 3% in this and the next financial year.

Capital expenditure is expected to be between £670m and £690m for the year, including spending on flood defences.

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