Severn Trent paid over £2m to fight off bill overcharging lawsuit
Severn Trent paid out more than £2m in legal fees to defend allegations it had overcharged millions of household consumers by underreporting sewage leaks.
Professional costs increased by £2.3m last year, according to the firm’s annual report. These were mainly in relation to a class action claim brought against Severn Trent and a number of other water companies at the Competition Appeal Tribunal.
The claim, valued at more than £1.5bn, was ultimately dismissed in March.
It alleged six UK water companies – Thames Water, Anglian Water, Northumbrian Water, Severn Trent, United Utilities and Yorkshire Water – had breached competition laws by misguiding regulators on a number of pollution incidents.
Severn Trent described the claim as “highly inaccurate and not reflective at all of how we work,” in a statement following the decision.
“We can now move on, and our focus remains on delivering sector leading environmental performance, investing in our communities and delivering the best value for our customers.”
Herbert Smith Freehills, the Silver Circle law firm, represented Severn Trent Water and Severn Trent Plc.
The figure sheds some light on the sums made by City firms as the water industry hires financial advisers and lawyers amid a crisis over chronic leaks.
Thames Water narrowly avoided bankruptcy earlier this year via a £3bn emergency loan from creditors, and looks set to be taken over by KKR.
Severn Trent raised customer bills by an average of 21 per cent in April as profit rose by more than half to £320m, according to its annual report.
It said capital investment had reached a record £1.8bn, up 40 per cent year-on-year and edging towards next year’s guidance of between £1.7bn to £1.9bn.
Full-year dividends per ordinary share rose 4.2 per cent to 121.71p, alongside a 41.2 per cent jump in earnings per share to 112.1p.
Chief executive Liv Garfield said: “We’re proud to be a successful Midlands business, sharing another year of record performance and continually improving service and value for our customers.
“We’re focused on getting things done – with our largest ever investment of £1.7bn in the people and places we serve, delivering major infrastructure improvements across the region.”
A Severn Trent spokesperson said: “This claim and subsequent appeal to the Competition Appeals Tribunal has been found to be completely without merit and has been dismissed unanimously on all grounds. The CAT has now awarded the claimant to pay costs to all the companies involved.
“From the outset we were clear that this speculative claim was without substance, and not in any way reflective of how we work.
“Our focus has remained on delivering sector leading performance, investing in our communities and delivering best value for our customers.”