Bad debts hold steady at Severn Trent as prices rise

Severn Trent, the water company focused on the Midlands and mid-Wales, says performance for the period since the beginning of April has been in line with expectations".

The price customers are paying for water increased by 5.2% from April 1st but consumption is declining.

Bad debts of people unable to pay their water bills are still running at around 2.2% of turnover with the company saying it will continue to monitor unemployment levels.

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Operating costs are expected to rise year-on-year, due to the impact of inflation, a full year of operating private drains and sewer assets, and increases in quasi-taxes, but the firm says these increase should be offset by efficiency improvements.

Net capital expenditure will be between £570m and £590m for the full year while the effective rate of tax the group is paying for 2012/2013 will be between 24% and 26%.

Severn Trent shares have gained 14% since the start of the year.

BS