Good morning, and welcome to Pennon's Spotlight session on South West Water's 2025 to 2030 business plan. I'm joined today by Paul Boote, our Chief Financial Officer, and together we will walk you through the highlights. Our plan has been shaped by customers from across the Greater South West: Devon, Cornwall, Bournemouth, and more recently, the Isles of Scilly and Bristol. Levels of support for the key initiatives are upwards of 90%. In short, our customers' priorities are our priorities. It's also a no-surprise plan. We have the same priorities that I spoke about at our year-end results presentation back in June. As with any new plan, you need a robust base, and we have that. Our plan is built on a rock-solid foundation with demonstrable operational resilience and a strong balance sheet, with gearing levels at just over 60%. We are delivering on our current plan, with relative cumulative K7 performance across outcomes upper quartile when compared to the rest of the sector. That said, there are notable areas where we have needed to do more. For example, pollution performance, where we have been tracking improvements in that area since 2020. That is why we are confident about our plan. It is an ambitious plan. It is the right plan and the right deal for our region. We are well positioned to deliver what is a doubling of investment to GBP 2.8 billion, with 10-year supply chain frameworks already in place with our tier 1 partners. We have a sustainable people strategy that is already building for the future, where we will see 1,000 apprenticeships and graduates to 2030, having welcomed over 300 so far. We will continue to build on the momentum that we have today, tackling the biggest challenges head-on in our region as we invest to protect water quality and resilience, tackle the use of storm overflows at our beaches, eradicate pollutions, and protect the environment from effects of climate change whilst making environmental gains. With a laser-like focus on efficiency, it's also a plan that supports customer affordability by keeping bills as low as they can be. It's also a financiable plan. With a strong balance sheet and financial resilience, we have already been accelerating investment, whether as part of the GBP 82 million Green Recovery Initiative, the GBP 45 million WaterFit program, the GBP 125 million to break the cycle of the drought, and most recently, the GBP 52 million investment as part of Defra's Accelerated Investment Scheme. It's our continuing track record of outperformance that has enabled us to remain agile and fleet of foot in responding to challenges and funding investments as and when needed. While this is a plan for 2025 to 2030, we're not waiting. We are already doing this. This is a plan that meets the different needs of our region, a balanced plan driving both improvements for water and wastewater services. As an expanded business, we have a growing, geographically diverse base. With a third of the nation's bathing beaches, 860 miles of coastline, and a largely granite peninsula with adjacency to the western approaches of the Atlantic Ocean, climate change is already changing how we live. Drought, flooding, rising sea levels, and coastal erosion are too frequently part of everyday lives. Last year, the South West experienced one of the hottest, driest summers since records began. Most of our population is concentrated around the coastline, and so are the majority of our assets. This is also a region largely dependent on tourism and agriculture for its economic health. With 1.8 million customers in Devon and Cornwall, 0.5 million Bournemouth Water customers, 1.2 million Bristol Water customers, and just over 2,000 customers on the Isles of Scilly, our services need to be able to flex to expand to over 10 million customers to serve, given the region is the U.K.'s most visited tourist area outside of London. 80% of those visiting come specifically to enjoy the coastline. It's also a region with an ambition to become the first Net Zero carbon region in England. Given this, our customer research, involving over 30,000 customers and 1,000 wider stakeholders, has been our most extensive and wide-reaching ever. With our unique business model, in which we have issued over 90,000 shares to customers, with 1 in 14 households being shareholders, the independent WaterShare Plus Customer Advisory Panel has rigorously challenged us to ensure we have got this right. What's also unique for us is that our panel doesn't just exist for a price review. They are an enduring part of our business model, ensuring the views of customers are always represented, and we are held to account. The significant GBP 40 million WaterShare financial benefits seen since 2020 are distributed to customers in a way voted for by them. We can be confident that customers have shaped this plan, the investment priorities, and the profiling of customer bills. With a step change in the willingness to pay, up from GBP 10-GBP 15 a year ago to GBP 50 this time round for improved investments, we have seen a 10-point increase of the acceptability of this plan at 74%. Overall, this plan has received strong support that we should invest more, with universal agreement that the priorities are the right ones. Given our GBP 2.8 billion investment will create about 2,000 jobs, it will provide much-needed security in the wider supply chain across the region, that's largely dependent on tourism and agriculture for its economic health. We are confident of our future delivery because we are already doing this. We are tackling storm overflows and pollutions. WaterFit, our GBP 100 million plan for healthy rivers and seas, is targeting 49 of our 151 beaches, with 70 schemes in progress or completed as we increase storm storage, sewer separation, and divert flows with a green-first, nature-based approach. Our 2020 pollutions reduction plan is delivering, as we said it would, with a 50% reduction since 2020 and with the second lowest number of absolute pollutions in the sector in 2022. By 2025, we are targeting to be the lowest. We are breaking the cycle of the drought. On water resilience, we're investing GBP 125 million in the period to 2025, and last week we lifted the hosepipe ban, despite being in a region classified as in drought. For Devon and Cornwall, we are on track to improve water availability by 30% and 45% respectively by 2025, with well over double the resource levels today compared with last year. We have delivered new water resources and water efficiency plans. To date, we have repurposed Hawks Tor Quarry. We are on track to install Cornwall's first-ever desalination plant to improve resilience, and we've issued over 240,000 free water-saving devices to customers. On Net Zero, our Pennon Power business is investing GBP 145 million in solar PV. We've acquired four sites across the UK that will deliver 135 gigawatt hours of electricity annually, and with battery storage, additionally giving us 60 megawatts. This accelerates our group Net Zero target of 50% self-generation, in addition to de-risking our exposure to volatility in the global power markets, with attractive commercial returns and will come online in 2025, 2026. On customer affordability, I've always said that we need to do two things: deliver cost-based efficiency, which in turn keeps bills for all customers as low as they can be, and secondly, support customers who are struggling with specific affordability issues. On the first point, we have delivered. Bills today are lower than they were 10 years ago. On the second point, we have been doubling down on efforts to support customers during this ongoing cost of living crisis, with GBP 85 million of support. We are on track to deliver our board pledge of zero customers in water poverty, with 97% of South West Water customers and 100% of Bristol Water customers finding their bills affordable. In 2023, we have kept bill increases well below inflation levels. Overall, we are targeting improved operational performance for the range of this period to deliver against the performance commitments with published action plans in place. We are on a trajectory upwards to 2025, noting Ofwat's most recent performance assessment of South West Water and the EA's latest EPA assessment. Having enacted the license merger clearance in February 2023, post-clearance from Ofwat, we are now able to focus on ensuring improved performance in Bristol Water, with increased operational rigor and enhanced expenditure. Our socially responsible business model, which turns the monopoly water provider model on its head by giving customers a stake and a say in their local water company, is growing and is a useful mechanism for sharing our performance directly with customers. All of this is underpinned by a strong balance sheet. Moving on to the plan. Key highlights of the plan are as follows: We will be investing, but investing efficiently. Total expenditure in the plan is GBP 4.5 billion, up from the GBP 2.9 billion to 2025. We have pushed ourselves to be efficient, assuming 12% efficiency, which in turn keeps bill increases to a minimum. Bills will be rising in real terms by on average, 4% per annum for Devon, Cornwall, Isles of Scilly, and Bournemouth. On average, by 3% for customers in Bristol throughout the K8 period. In a cost of living crisis, we know any bill increase can be unwelcome. We have tested our plan with customers, and we have good support at 74%. For investors, there is growth. In nominal terms, this is 38%, in real terms, 25%, and we have put forward an ambitious set of outcomes that will see the opportunity to gain from good performance with an ability to share this between investors and customers. Using Ofwat's assessment of the cost of capital, we are financeable, and gearing is forecast to remain within our well-established range of 55%-65%. The challenges we are tackling now are the key priorities for our plan to 2030. So let's start with storm overflows and pollutions. It would be remiss of me not to acknowledge up front that this has been a challenging time for the sector, and I'm sure there's no one who hasn't seen the media and the social media headlines and heard the strength of feeling and anger around the use of storm overflows, a feature of our Victorian sewage system. With a third of the nation's bathing beaches and our 860 miles of coastline, I'm acutely aware of our impacts on our environment in this beautiful region. For our customers, it is one of the top three priorities to get this fixed. The second challenge is water quality and resilience. The number one priority for customers, safe, clean drinking water. Water supply across our region is under growing pressure. The granite coastal peninsula we operate across a unique topography, where 92% of the water resources in our region is reliant upon and derived from rivers backed up by reservoirs. We saw that acutely last year with the hottest, driest weather on record, culminating in a one-in-200-year event for the most westerly part of our region. For the first time in over 25 years, we had to implement our drought plan for Cornwall and parts of Devon, and we are one of two regions that has remained in drought. The third challenge, climate change and our trajectory to achieve net zero in 2030. Given our topography and power needs, accelerating our investment in renewables serves to mitigate the future impacts of a volatile energy market, whilst also counting towards our net zero plans. The fourth challenge, affordability. We are also all living through the worst cost of living crisis that many have experienced in their lifetime. And in a region where one in three constituencies have above average levels of deprivation, rising prices have weighed heavily on everyone, and it's critical that we are supporting our, all our customers to deliver our service as efficiently as possible, and that we are supporting our communities. So what will our plan deliver? First, storm overflows and pollutions. By 2030, we will have tackled storm overflows at all of our 151 bathing beaches, our shellfish waters, and high spilling sites, a key priority in our region. Between now and 2030, to restore confidence in bathing waters, in addition to the monitors we have already installed, we will implement a first-of-its-kind sampling and water quality monitoring regime so that everyone can have the confidence to enjoy being in the water at their favorite beach. As a responsible business, we will take a green-first approach to investment, working with nature to improve drainage and reduce storm overflows, with 50% of our solutions being catchment-based. Second, water quality and resilience. Water quality is the number one priority for our customers. We will be upgrading a third of water treatment works across our regions. For Bristol customers, we will be investing in 2 new treatment works, alongside Bournemouth's completion of the state-of-the-art ceramic membrane treatment works, and we'll be resurrecting plans for the Cheddar Two Reservoir to boost water resources in the Greater Southwest. We will enhance our Interregional Water Grid to enable us to move 60% more water between South West Water supply zones. In addition, we will be reducing leakage levels to less than 10% on our water network and less than 4% on customers' networks. The third challenge, net zero and environmental gains. We will continue with our promise to the planet to become net zero by 2030 by decarbonizing our operations and reducing emissions of nitrous oxide, expanding our nature recovery program, extending upstream thinking into new catchments, and planting 300,000 trees, and renaturalizing waterways for wildlife. We will also transform such treatment processes to protect rivers and generate enough energy to power 10,000 homes. Fourth challenge, addressing affordability. Importantly, in a cost of living crisis, we appreciate how unwelcome it is for any bills to increase. We have therefore challenged ourselves to ensure that the necessary increases as we invest in the region are fair and that we are as efficient as possible. However, we completely understand that for some people, no increase is acceptable, and we will be extending our bold pledge for zero water poverty to 2030 and delivering our largest ever package of support with GBP 200 million of affordability measures. We will also be trialing and introducing a range of fair tariffs to help customers use less and save more, and recognizing the unique demographic of our region with its high dependency on tourism, where prevalence of second homes can be as high as 40% in hotspots. If you can't choose your water provider, we believe you should have a say, which is why we intend to grow our unique WaterShare Plus scheme to one in every ten households, funded by sharing financial gains with customers. Our K8 business plan is our biggest ever as we increase investment levels to meet the higher standards that we all want to see. We have put forward a plan that totals GBP 4.5 billion in expenditure over the five-year period in 2022/2023 prices. GBP 2.8 billion of this Totex is capital investment, more than doubling the capital investment level in K7. This increase in investment is driven by targeted spend to reduce storm overflow usage, secure water quality and resilience, and deliver on our Net Zero commitment. The balance of GBP 1.7 billion reflects efficient day-to-day operational spend to deliver our services for customers. This level of operational spend is GBP 0.2 billion higher than in K7 and includes an allowance for additional spend associated with the delivery of new assets through our capital program. In preparing our plans, we have been mindful of customer bill affordability pressures. That's why we believe it is important that we continue to challenge ourselves to deliver efficiencies through innovation and improve ways of working. The level of efficiency we have built into this plan equates to a 12% Totex saving. Overall, this higher level of capital investment will increase RCV from GBP 5.4 billion at the start of the period to GBP 7.5 billion by 2030. This represents a 38% nominal increase and equates to a 25% real increase. We expect our starting RCV to include around GBP 400 million of regulatory adjustments, including around GBP 100 million that would ordinarily have been a revenue adjustment in K8, which we are proposing to Ofwat is included in RCV instead. This adjustment is possible because of our robust balance sheet, as we can lower bills without compromising our financeability. Our plan uses Ofwat's early view of the weighted average cost of capital at 3.29% real. We have reviewed our financeability on Ofwat's notional company basis and again, using our actual financing structures. Key rating measures that we assess include gearing and adjusted interest cover. On these metrics, our plan is well-placed, with gearing remaining within our well-established range of 55%-65% to 2030 on both a notional and actual basis. In addition, our actual financing structure, which includes a low level of index-linked debt at around 25%, provides flexibility and resilience to our interest cover measure as we have plenty of capacity to raise our proportion of index-linked debt. Overall, our financeability on this basis equates to a strong investment grade rating at A3/Baa1 through the period on both a notional and actual basis. It is important to remember that should Ofwat reflect the more recent market conditions and a more representative split of new to embedded debt, then the weighted average cost of capital will increase. Presently, we believe this increase would be around 45 basis points, which would have the effect of improving our financeability measures further. Over the period, we expect to raise around GBP 2.5 billion of debt, a significant increase on K7's requirement of GBP 1.1 billion, and compares to South West Water's net debt at 31st of March 2023 of GBP 2.9 billion... Of the GBP 2.5 billion we will be raising, GBP 0.7 billion relates to refinancing of existing debt. As the level of debt required to be raised is significantly higher than ever before, we anticipate utilizing public bond markets and private placements more frequently than in the past. This will be in addition to continuing to fund through our existing diversified sources, that includes our supportive relationship banks and institutions through bilateral loans and leases. We will continue to seek to raise all new funding through our sustainable financing framework that allows us to reach a deeper pool of investors efficiently. Over the last two regulatory periods, South West Water has led the sector in delivering returns on regulated equity, consistently doubling base returns. For this next regulatory period, we see the range of RoRE outcomes at a similar level to that available in K7. We have put forward a plan with a balanced risk and return profile, indicating a potential range of 0-8.6%, around a base level of return currently assumed to be 4.6%. We have modeled the potential outperformance on Totex at around ±1%, with ODIs at ±2%, and financing consistent with Ofwat's assumption of ±0.7%. We are keen to make sure our plan is deliverable, and ODIs balance the benefit of high achievement with the risk that may occur in delivery, particularly where third parties and events out with our control can impact outcomes. Whilst there are aspects of the ODI framework to conclude across the industry, it is clear for K8, the focus will be on common ODIs. South West Water is a top-quartile performer in respect of these common ODIs, and so is relatively well positioned. This, coupled with our improving momentum and plans to deliver our K7 commitments, means we expect to be well-placed to perform through K8. South West Water's current regulatory dividend policy is already embedded in Ofwat's RoRE framework. It consists of a base dividend plus additional or reduced amounts reflecting out or underperformance in a year. This means we consider performance in terms of outcomes for customers and the environment through ODIs, alongside the efficient delivery of services and our capital program. We believe the fundamentals of this existing policy are consistent with the ethos and the requirements for K8. In terms of model dividend returns, we have followed Ofwat's guidance and assumed a base dividend yield of 2% at the low end of the range of 2%-4%, noting their guidance suggests that where RCV growth is significant, as we believe our 38% nominal growth to be, then the yield should be at the low end of the range. This level of yield equates to a £1 million base dividend amount that is similar to that being earned in K7, and therefore reflects a continuation of base dividend levels. In line with past practice, we expect to announce Pennon's dividend policy for 2025-2030 following the final determination. We are at the start of a process. We anticipate draft determination in spring 2024, allowing a period of between 6 and 9 months ahead of final determination, published in December 2024. In summary, we are delivering robust performance in K7. We are well positioned to do the same in K8. Our 2025 to 2030 business plan for South West Water is a plan building on the momentum we have today that goes further in tackling the biggest challenges in our region as we invest to protect water quality and resilience, tackle storm overflows at our beaches, eradicate pollutions, and protect the environment from climate change. With a laser-like focus on efficiency, it's also a plan that supports customer affordability. We have built capability to deliver this plan. We have our brilliant colleagues in the supply chain ready to deliver. We have a new executive team in place, and we are eager to deliver the change our regions in the South West require. Our GBP 2.8 billion investment is an ambitious investment plan. That's the right plan, and it's the right deal for our region. Finally, we know we can do it because we're already doing this. Hello, everyone, and welcome to the Pennon PR24 Spotlight Call. I will now hand the floor over to Susan Davy to begin. Please go ahead. Thanks, Ed. Good morning, everyone, and welcome to Pennon's Spotlight session on South West Water's 2025 to 2030 business plan. Thank you for joining us today. I am joined by members of the exec team. I've got Paul Boote, CFO, John Halsall, Chief Operating Officer, Adele Barker, Chief People Officer, Laura Flowerdew, Chief Customer and Digital Officer, Richard Price, Chief Engineering Officer, and David Harris, Drought and Resilience Director. And of course, we've got Jen Cooke, who's Head of Investor Relations. So, we submitted our plan on Monday, and our plan is absolutely building on the momentum that we've got today. It does go further in tackling the biggest challenges in our region. We're investing to protect water quality and resilience. We are going to tackle storm overflows at our beaches, we are going to eradicate pollution, and we're going to protect the environment from climate change. We have a laser-like focus on efficiency, and that's an efficiency that will keep bills as low as they can be for our customers, and that will in turn support customer affordability. We have built the capability to deliver this plan. We've got our brilliant colleagues and supply chain across our region ready to deliver. And I've just introduced them. We've got a new exec team in place, and we're eager to deliver, to deliver the change that our regions in the South West require. It's an ambitious investment plan, GBP 2.8 billion, but it is the right plan and it's the right deal for our region. And with that, I'm going to open for questions, for the exec team. So over to you. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you change your mind and wish to withdraw your question, please press star two. First question today comes from Martin Young at Investec. Please go ahead. Yep, good morning to everybody, and thanks very much for the presentation a little bit earlier. I've got two questions, if I can, please. The first of which, you know, looking at Thames Water, and I absolutely accept that they have many challenges that are not common to others in the sector. But they've stated in their plan that they will not be able to deliver the full extent of the asset investment program that they originally aspired to. In crafting your business plan and obviously ensuring its financability, did you scale back anywhere on aspiration? And if so, on what and in what amount? And then, secondly, you've made it very clear that you do not foresee a need for new equity, yet there is a difference between the gearing levels on the actual structure and Ofwat's notional structure. Look, I imagine that the answer is deep in the treasure trove of documentation that you have filed. But does the notional structure require equity either at the outset or within the AMP period? Thank you. Okay. Thanks, very much for that, Martin. Those two questions, I'll start obviously with your example around Thames Water and what they scaled back. I just want to be really clear, we obviously went through a very lengthy process to pull this plan together. We engaged with our customers, we engaged with our regulators, we engaged more broadly in our community to make sure we have got the right plan that we're putting forward. Yes, so there are legislative requirements that we have to deliver on, and those are in the plan. Yes, there are things that we want to go further and faster on, water resources, and making sure we've got investments in interconnectors that allow us to move water around our region. Incredibly important for us to deliver on. We obviously have a multi period plan that goes out further than 2030, but we have made sure we've got the right plan for this five years, and that's why we've got customer acceptability up at 74%. So it is the right plan. We are stretching ourselves in terms of investment, but we have got the balance right, we think, in terms of delivering on the improvements we need to make around storm overflows, around water resilience, and making sure that we can do that in such a way that delivers significant change in our region, but at a pace that is affordable for our customers. So yes, there are plans that go out further than that, you know, in terms of our submission, you know, we've got plans out to 2050 and beyond. So of course, there are investment aspects that will come in later periods. But as we've seen for K7, should the opportunity arise, and if we want to advance investment, then we won't hesitate to do so. We've seen that with our WaterFit investment to K7. We've seen that with our drought resilience investment, but we think we've put in the right plan for right now, Martin. And then in terms of the equity point, we have put in a plan that is financeable, whether on a notional basis, but we've scenario-tested it with our actual balances and forecasts that we can see in terms of debt costs. We are financeable within our well-established gearing range of 55%-65%. And that's what you'll see. I think, Martin, you referred to the mine of information that we will have submitted, and yes, there is a mine of information that we've submitted, but you will see that we are within that well-established gearing range over that period. Okay, thank you. Our next question comes from Jenny Ping at Citi. Please go ahead. Hi, thanks very much. Also, two questions from me. Just firstly, can I follow up on Martin's question with regards, in the context of, the dividend? So how do you square the circle effectively at the 2% dividend yield assumed at the water company level, and look to fund the gap effectively at the group level? And that would be my first question. And then secondly, just in terms of getting your thoughts around one of your peers going ahead with an equity raise last week, how do you read the signal that sends effectively to the regulator? And I guess tagging on to that, am I right in reading, you're effectively ruling out an equity raise yourself? Thanks. Okay. Thanks, Jenny. Obviously, you wouldn't expect me to talk about the Pennon Group dividend policy for the 2025-2030 period. That's not something that we would do until we get through this process, but I'm sure I'll hand over to Paul, who can talk about the why we've then gone for the 2% yield in terms of the dividend South West Water for this plan. Yeah. Morning, Jenny. In terms of that 2%, really the way we've put the plan together is very much a continuation of what we've seen in PR19. So the way South West's dividend policy works is we have a base dividend that is paid out. And then we have on top of that a framework that sits around RoRE returns, and that delivers outperformance as we've seen in the last two regulatory periods, and therefore an outperformance dividend comes on top as well. There's also within that policy the ability to do other gearings related to gearing, for example, to make sure we're in the right place. Now, that's the construct that we have at the moment. We think that construct fits with the requirements for K8 as well. When we've looked at the math of all that, the base dividend level, the pound amount, is very much at a continuing level by staying at a 2% dividend yield. That 2% dividend yield, yes, it's at the low end of the 2%-4% range that Ofwat set out in their guidance, but their guidance was also pointing out the way you do have significant RCV growth, as we do, at 38% nominal, then they would expect you to be towards the lower end of that rate. We are very much following that guidance, but also following a continuity of dividend amount in terms of the base dividend from PR19 into the next regulatory period. Just a consistent approach there, really. Okay, thanks, Jenny. And I think your second question was around the equity raise, by one of our peers and what that signals to the regulator. Well, I'm not really going to comment on our peers' plans, but obviously, I'm sure in their submission, that signals to the regulator that, they needed the equity to, to make sure that the gearing was in a place that they wanted it to be. And I'll probably say it's no more than that, in terms of, you know, what our peers have done, is for them. What we're doing is for us, and I'll just repeat that we've put in a plan that's financeable, and our gearing, remains within our well-established range of 55%-65%. Thanks. Our next question comes from Dominic Nash at Barclays. Please go ahead. Good morning, everyone. A couple of questions from me, please, if that's the going trend. I'm afraid I'm going to sort of continue on the dividend question, if that's okay, for the first one. And then the second one, I actually probably easier to ask, which is, you have 74% customer acceptance for your plan. Could you give us some sort of details on what the other 26% liked, and sort of like, how the range is acceptance changed with different scenarios? But going back to the dividend one, the question I've got is that on your business plan, you say that your actual debt to RAB reaches 65% on an actual basis, not notional basis, by 2025, sorry, by 2030, and that's on a 2% real dividend yield. The question I've got on that one is that you say, I think, you will pay a higher dividend if you have outperformance in your on your RoRE numbers, but you do have, I think, some financing outperformance baked into your actual numbers. Has that been reflected in dividend payouts to get to your 65%? On that 65% number, if you didn't have the financing outperformance, would that be slightly higher than 65%? Thank you. Okay, yes, shall I go with the dividend one first? So, yeah, so just to recap then. So you're right in terms of, on an actual basis, the way we've modeled the numbers through, we get to 64.6%. So coming up towards 65% gearing by 2030, and that is based on that 2% dividend yield. And really, we are just assuming base performance in terms of delivery, obviously achieving all the business plan commitments, but not assuming any under our outperformance in terms of Totex or ODIs or anything like that. In terms of financing, the way we've modeled that financing in, we have included some elements of embedded debt in there, already. I think it's worth noting that, the way Ofwat are currently modeling the WACC, there is, there is potentially further true-up still to come in terms of the two years of this regulatory period that we're currently in, K7, and the way the, the way the IVOAs comes through. So if you look at the cost of debt that they've assumed in the WACC, it is lower than is currently being incurred. So there is potential there when it actually comes through and the WACC is finalized, there will be, potentially more outperformance as, as that market level is set. So that's just worth noting as well. But in terms of what we've included in the plan, we've only included that 2% base dividend yield payout, so we haven't assumed anything further in terms of a dividend payout relating to any outperformance, whether it's financing or ODIs or Totex, just the 2%. Sorry, Paul, can I just jump in with a follow-up question on that, on that point? So if we saw a 100 pip increase in the baseline RRRE at the Final Determination, would that mean that you probably would be able to go up to a 3% real dividend policy, or would you be kept in a 2% number, do you think? Well, yeah, that's not a question for now. Yeah. But I think, I think you're sort of right in saying that, you know, if we get a new WACC coming through from the regulator, clearly, we'll have to run that through the business plan numbers, and it will obviously drive different outcomes in terms of financeability. It'll improve financeability. Obviously, revenues, indeed, could be higher, and therefore, we would have a look at that in the round at the time. I was going to say as well, Dominic, just, you know, this is the start of a process with the regulator... there'll be, I'm sure, many aspects for us to discuss along with other companies in terms of where we get to in terms of the final plan, and I think the WACC is just one element of it. So as ever, we will look at our plan in the round. We've put in a plan that we think in the round is the right plan, but obviously, if things change, then it won't just be one element that changes, I'm sure. So, you know, we will walk through that process as you might anticipate we would do very positively and look at what comes back. But it will be just, you know, the WACC is just one element of it. So here's our plan. We're very confident in our plan. We know what we have to do, and I'm sure the regulator will see that when they, when they look through what we've submitted. But, if anything changes, you know, that won't just be one aspect. I'm sure it'll be other aspects as well that we would need to con... And then your second question, Donald, was around customer acceptance and accessibility, and our percentages, and I was going to invite Laura, just to comment on. I think you asked, what about the, the rest of the customers and what they were saying? So, Laura. Thank you, and good morning. So you're right, 74% acceptability from our customers, slightly higher in our water-only companies and slightly lower in South West Water. And that's the customers that have said that the plan is unacceptable are really reflecting some of the messages they've had from the media around perceptions of the water company. So it's not that it's not the right plan, they're very strongly in favor of the investment. We've got over 90% support from the investment component, especially around Storm Overflow. What they are questioning is how that's paid for, whether it's funded by the company, rather than customers. And so that's very clearly the strongest messages from those that are unacceptable. So less about what the plan is actually saying, but actually the funding mechanism that's coming through from a customer perception. Thank you. Yeah. Thanks, Laura, and I think it's probably worth saying that, you know, when we compare the willingness to pay, that we've had for this, business plan submission with the willingness to pay we've had in previous plans, there is a sharp increase in that willingness to pay. So I think Laura is absolutely right. You know, for those customers who see the need for investment, and there are some percentages that we've had from customers at the highest we've seen, when we've done, testing with customers, this is the highest we've seen in terms of acceptability and acknowledgment of the priorities and willingness to pay. You know, that has gone up from, I think, around for extra investment, from around GBP 10-GBP 15 at the last price review, up to over GBP 50 on average. For some customers, the willingness to pay is even higher than that for a third of customers. We absolutely know, though, there is a cost of living crisis, and affordability is acute for a number of customers in our region, and we've also got our toolkit in place for customers now, and that will be growing as we get into the next regulatory period. Laura is absolutely right. Inevitably, there are customers who, you know, will want to challenge what we're doing, and rightly so. Our next question comes from Bartek Kubicki from SocGen. Please go ahead. Thank you and good morning. Two issues also I would like to discuss with you. Firstly, on the efficiency factor, you are assuming 12% over AMP8. I think there's a little bit of a divergence between different companies assuming different numbers. What do you think Ofwat's approach could be towards that? Will they unify the efficiency factor? Will they look at company-specific efficiency factors? And then how does it compare to AMP7? And secondly, I would like to ask you about the bridge between the closing AMP7 RCV and the opening AMP8 RCV, and in particular, on your estimates regarding the tax treatment, because on one hand, you had a tax increase over AMP7 from 19%-25%, and how are you looking at this in your business plan? Secondly, in FY 2024 and FY 2025, you will probably pay zero taxes. So also, how do you treat this with regards to how it could impact AMP8 business plan? And I guess also there could be some implications coming from Green Recovery investment as well on your tax. That would be everything. Thank you. Okay. Morning, Bartek. Thanks for your questions. Perhaps if I start with the efficiency and then hand over to Paul to do the comparison with AMP seven and then the opening, closing adjustments. So in terms of the efficiency factor, you're quite right in the sense that, you know, we've all, as companies, put in our plans, we've gone through very meticulously what we've put in there, and we've set ourselves some challenging efficiency targets. Quite right to do so, it is one of the ways we keep bills for customers in our region as possible, is by making sure that we deliver on our efficiency. We've also done some modeling to understand where we sit in terms of our efficiency levels both relatively across the sector and as ourselves putting in our own plan. So that's where we come up with the 12%, which we think is a challenging but deliverable efficiency level and is obviously helping to keep bills as low as they can be. Yeah, and, in terms of how that compares to the prior periods, we are looking to continue and accelerate and deliver more efficiency. So, that level is, is, is ramping up compared to where we were for K7. Now, in terms of tax, you're right, tax has been an interesting time for tax over recent years. There have been a number of changes that have come through in this regulatory period when compared to how the FD was set. Not only the rates obviously changing, but also capital allowances, and then obviously also the profit profile with changes in interest rates driven by index-linked, as we talked about before, and higher costs coming through. So that, that's also had the effect of, reducing the ability, some of the profit levels that have come through, and put us in a place where actually, given accelerated capital allowances that are coming through as well, we're in a place where tax losses are readily available and being produced. That impacts this period, and to your point, it also impacts next period. In terms of modeling, we have looked at that, and we have established our model based on the fact that we will be opening the next regulatory period with an element of tax losses, and that will then feed through into the next regulatory period, as appropriate, and there's mechanical ways that that will feed through, following the tax legislation. So we are assuming a real tax position that then flows into the next regulatory period. In terms of the true-up adjustments for the regulatory period that we're currently in, those tax true-ups, because of the different puts and takes in there, when they all come together, they don't add to a huge amount, and therefore, that's why they're included in that smaller other amount at the bottom of the table. And they don't really feature as heavily as some of the other adjustments we've got. But that's really because of positive and negative adjustments within there. It's something that is a complex area, and if you do go into the data tables, you'll see lots of information around those allowances. Just to sum up, so all the AMP7 Totex changes will impact the opening RCV, or you are assuming also some to impact your allowed revenues in AMP8? That will all impact opening RCV. Super. Thank you very much. Our next question is from Pavan Mahbubani at J.P. Morgan. Please go ahead. Hi, everyone. Good morning. Thank you for taking my questions. I have two related questions, please. The first one is more high level on the financeability of your plan. Obviously, you've used the initial view of the WACC allowance, but are there any other levers that you've sort of pulled in the plan to ensure that it's financeable and things that you would signal to Ofwat that you would potentially change if indeed the WACC allowance came in higher? The second related question is on excess Fast money. So I've noticed in your plan, you have some excess Fast money in there. Should we think of that as a financeability lever, or how should we think about what your proposals are for the excess Fast money above your OpEx ratio? Well, thanks for your questions this morning, Pavan, and I think, actually, we'll answer them the other way around. So perhaps if we start with the excess Fast money, and then we'll go back to what levers we pulled or otherwise in terms of our financeability, and we haven't. So, Paul, do you want to talk about the Yeah. Quick point about this Fast money? Yeah. So in terms of the way we approach pay as you go, we, we obviously follow Ofwat's guidance, and that does allow for you to consider IRE expenditure as part of, as part of that calculation, and that's, that's what we've done. It's been something that a range of companies have done this period that we're currently in, and also in the plans, they've also done that as well. So it is just in line with guidance, and in our minds, that is simply the natural, the natural split between capital spend, where we are enhancing assets, and the maintenance spend, which includes operational spend, as well as that IRE. So there is a small amount of IRE that therefore comes into that pay as you go consideration. But that's just a standard sort of adjustment that we would make from period to period. So that's that aspect. In terms of financeability, as Susan says, obviously, clearly, the plan we put forward is financeable, both notional and actual basis, and we're very content with where we're seeing that come through in terms of the credit metrics that we're running. Now, in terms of levers, I think we are well-placed, and therefore, we can pull levers. One particular one is around index-linked debt. So we are a company that has a very low percentage of index-linked debt when you compare us across the sector, and that means, you know, there is scope for us to increase that should we wish to, and that clearly would help with certain credit metrics, particularly the interest cover ratio, you know, should we need to do that. So, so yes, we're in a good place. That means we can be resilient, and we do have levers to pull, should we, should we need to. But within this plan, I don't believe index-linked debts will go outside of Ofwat's 33% notional position that they set out. So that's the sort of level that is quite low for the industry already, but that's the sort of height of the level that you'll see in any of our plans at the moment, I think. And in terms of the WACC, you're right. You know, we could talk about that for quite some time and where it's currently positioned, clearly Ofwat put out that early view, and that's very much what we've used. But yes, there are different ways to look at that, particularly around updating debt for current market conditions. But also, if you look at that split of new and embedded debt, clearly that isn't set at a representative level, we believe, at the moment for our plan, probably for other companies' plans, particularly given the high levels of investment that we all want to see. So I think that's something that is an area that potentially might get some focus. Great. Thank you. The next question is from Ahmed Farman from Jefferies. Please go ahead. Thank you for taking my question. I just want to sort of first question is just a clarification. So did I, did I sort of understood your, comment earlier correctly, that there is some sort of financing outperformance on the embedded debt that is included within the business plan? And if that is indeed the case, could you just help us understand how that impacts the gearing, sort of the group gearing by 2030? And then my, my second question is any sort of, initial thoughts you have on how you sort of are positioned within the sector on common ODIs, and what are going to be the sort of, in your view, some of the critical common ODIs, for Ofwat underperformance or over the sort of the next regulatory period for Pennon? Thank you. Okay. Paul, do you want to talk about this then- Yeah. And then exactly. Yeah. So, just to be clear on how the models go in, so we submit the models on a first of all, a notional basis. So in that instance, we're using the notional gearing at the starting point of the period, that 55%, and obviously, the WACC, the very WACC that I've sort of set out. And then in that, we're also using cost of debt, which entirely align with the notional position, i.e., we're not putting in our actual. So that's the notional position. So that's what's gone in there. In terms of when we then look at our actual position, we start with our actual financing structures. So we don't start with 55% gearing. We start with where we expect to finish the K7 period. Then we also put in for the debt that we have on our books, we also put in the cost of that debt. Now, that is slightly lower than the embedded debt rates that Ofwat will have put out. But as I was saying earlier, this is really only comparing it to that early view WACC. So if that was to be updated, and we don't know if it will, but if it was to be updated, then that, again, will flow through an update. So at this moment in time, it's just a first view of what that might be pegged against where that early WACC has come out. So, it's not, it's not something that is amazingly significant, but it may well change as the WACC change. Okay, thank you. And then, I think the question was around, ODIs and outcomes and just where do we see ourselves positioned for that? I think it's interesting is that we've, obviously set ourselves some stretching commitments for this regulatory period. And while overall, you know, we are top quartile in terms of performance against those ODIs, there are some, you know, notable aspects, not the solutions performance. And if that means we've got to target operationally, changes that allow us to get to, a good place by the end of this regulatory period, i.e., 2025. And our solutions performance has improved since 2020, and we have reduced the number of pollution incidents, you know, for last year's numbers by, you know, 50% from 2020 to 2022. And we are targeting by the end of 2024 to get to a position where we will have, not just the second, lowest number of absolute solutions in the sector, but, the lowest. And we will get to a better position in terms of the EPA assessment as a result of that. Now, why I'm talking about that is because that is important when you then look ahead to the next regulatory period, and the performance metrics that we'll be, we'll be measuring ourselves against for them. And indeed, what's, not in place for this regulation period, but will be for next, for example, around pollution incidences, that there will be, and we put forward an opportunity to earn a reward for good performance in this area, which is not available in this regulatory period. So there will be a slightly different positioning for us going into AMP8. And indeed, a bespoke metric that we have for this regulation period around bathing water quality will become a common ODI for the next regulation periods. And, you know, the last two years, we've had to understand bathing water quality. So again, you know, there will be different metrics and different incentives that come into play as part of that common ODI positioning for AMP8. So we're absolutely focused, and John's here today, and he still can talk more about the plans that we've got in place to make sure our delivery gets to where it needs to get to by the end of this regulation period, 2025, and that sets us in a very good position for delivering on our plans for K8. And in our documentation that we put out, we did put a chart in the document that compared the ODIs that we've got in this regulation period with the ranges that we might see, and we've put forward as an incentive for next time. And you can see there that there are some opportunities that we've put forward to earn rewards for good performance, as well as obviously there being penalties in place where we don't perform. Now, we've got to go through the process with Ofwat in terms of those outcomes and that incentive position that we've put forward. We've used our own customer research to support that, and I'm sure that will be part of the discussion with Ofwat, when we, when we get to it in terms of the detail of the plan that we've put forward. But in terms of opportunity, yes, there is opportunity in K8, and our performance when we get to the end of K7, will be a different place from those environmental measures, which will mean we have more opportunity than we've had in this period to perform. Thank you. We have a follow-up from Bartek at Soc Gen. Please go ahead. Again, for this. Just one issue to discuss will be on your renewables. I would like to ask you whether in your business plan, because I guess renewables will be outside of the regulatory framework, whether in your business plan you are assuming that your self-generation will gradually increase through AMP8, and consequently, there will be efficiencies, or you are not assuming that? Do you assume that you will be buying power on the market, and as a result, there is a space for generating Totex outperformance? What is your view on this one? Thank you. Yeah, good question, Bartek. So in terms of what we've assumed in the business plan, for power, well, obviously, to get to the power cost, there's two components, isn't there? So there's consumption, and then there's the power price. Now, in terms of the power price, we've very much taken advice from, as you would imagine, leading experts in terms of forward curves, et cetera, and we have utilized that within the plan. So it's not predicated on the other side of the Pennon's business. It's more better based on what is the sort of genuine outlook for forward market prices at this point in time. I would also note, though, that that is, you know, no, from a Pennon Power perspective, that is no worse than the assumptions that are based in there. So actually, they do coexist quite well. But fundamentally, the power assumptions are very much based on market derived pricing. Now, in terms of efficiency of usage, that's something we're very much targeting, not only now, but also in the next regulatory period, because there will be a demands on consumption, and that's something that we're very much focused on. So we will be driving power consumption efficiencies from now through to 2030 as well, as well as continuing to build out from a Pennon Power perspective to give the group overall coverage to reduce our exposure to wholesale markets. Yeah, but also within this question, I ask you whether the fact that you will be increasing your self-generation, and probably this will be... that the cost of self-generating will be lower than the cost on the forward market, whether this is included in the business plan or this could be potentially a driver of Totex outperformance- No, it's not. So, no, as I say, the business plan is based on market prices, so no. Okay. Okay, that's clear. Yeah. So potentially, yes, but in terms of outperformance. Thank you very much. We have no further questions on the line. I will hand it back to Susan Davy for closing remarks. Okay, thanks very much, and thank you, everybody, for joining us this morning. As you've heard, our business plan is a business plan that we absolutely have put in. It's ambitious, it's deliverable, it's financial. We are tackling the biggest challenges head-on. There is a step change in investments, but there will be a step change in outcomes for our region as a consequence. So with that, we'll close and thank you.