Good morning, and welcome to the Severn Trent results presentation and the Q&A live session. I've got myself and James Platt here and the whole of the senior team in the room, so we can answer any questions. As you know how to answer it, you can do them online, you can put your hand up, all the various electronic means. Pavan, you are the first person. You win the first person out of the block today. Over to yourself for the first question, if that's okay. Thank you, guys. Congratulations on this incredible result. Thank you. I have three, please. Firstly, we saw last week that you decided to defer around GBP 39 million less ODIs than the imperial draft determinations. Can you walk us through the thinking behind that, in terms of your thoughts of bill volatility? That's my first question. Secondly, can you talk to us more about bill volatility in general? Do you expect to fully pass through this November's inflation into next year's bills? My last question is just asking for brief thoughts into your expectations for the final methodology for PR24 in December. How have your conversations been with the regulators since the draft? Anything we should be keeping an eye out for? Any questions. I'll take the second. Then definitely I'll probably hand over to Shane actually for number three and one, right? We're very conscious of bill volatility. We've got the second lowest bill in the land. Our bill is about GBP 1 a day, as you know, and that's an important point. We're seeing bad debt hold, and we're seeing customers still comfortable paying the bill as it stands today, right? We are conscious of this, but again, stay strong, backed off. We've decided that we're not going to put through the full inflation cost. We'll go a couple of% below whatever inflation is. We've been open about that. We'll be open today with the media if they ask a similar question. The thought process is that it's right to put some of the ODIs on, and that's what Shane will run through just through our thinking about it. At the same time, it's also right to make sure that it's below inflation. There's a lot of costs hitting families right now, so it's managing that balancing act. Shane, do you wanna run through the conversations with Ofwat that led to that? Yeah. In Ofwat's draft determination, you might recall they actually raised a question about how much we're deferring, and rightly so, because we've got a lot of RCV growth at PR24 and onwards. We're able to reduce some of the deferrals while still keeping bills at least 2%, around 2% below inflation. Ofwat signed off on that decision most recently. We also follow a lot of lead metrics as well, we are expecting, of course, to take through the full inflation and Green Recovery as well. Just published our draft charges, and we're publishing our final charges shortly. In terms of the conversation with Ofwat on PR24, been constructive as usual. We obviously may propose some changes to the draft methodology, notably including past performance in how they assess business plans. They'll be publishing the final methodology on the 13th of December. We look forward to seeing that to where they take into account past performance and just having the final certainty on the timetable and the common performance agreements in particular. Very good. Does that answer all your questions, Pavan? Yeah. That's all very clear. Thank you very much. Very good. Jenny, you're next up. Hello. Good morning. Hello. Morning. Just two please. Firstly, when we look at your double digit RORI numbers that you've indicated, are you able to narrow it down a little bit for us? I mean, double digit can be a very wide range. I guess a big part of that is coming from the financing outperformance. Can you give us a sense of the extent that part of the slice of the pie is? Then just going back on kind of longer term outlook, but specifically on inflation, obviously Ofwat has been very clear in terms of, you know, allowing the full inflation through this band and retaining on balance sheets. Is there any discussions already about the next band on how inflation is going to be treated? My understanding is Ofgem is looking to go down this corridor route at some stage, where you have a cap and floor. Are you having those type of discussions with Ofwat, I think? I'll take those. No conversations around that with Ofwat. Don't forget, we've had a long period of low inflation growth. Yes, we've seen this year and next year as being slightly different. I mean, we've for a long period of time had a very strong efficiency situation in the water sector. We've had ROI returns on average being very low. If you look even today in a high inflation era, most companies are not making the base return. That's very, very different to Ofwat, to Ofgem. In an energy situation, most companies are making 10%-12% RORI for a long period of time. Most companies in the water sector are making 3%-5% RORI in that same period of time. I think it's important to get the context of the regulator to work out what decisions they might take. Base returns is very different to those two sectors. I don't know, Shane, whether you wanted to add anything to that. Okay, perfect. On the second one, double digit does begin at 10%. We're not gonna give you more guidance than that, I guess, Jenny. The three things that are the levers is the first lever, and I'll pass to James to give a couple of points on financing. The first lever is can you look for the Totex allowance? I think that's one of the big announcements we are making today, is that we're confident that we do run a good ship. We have negotiated well, and most importantly, fast start and some good decisions on in-sourcing of resource means that we are calling to be within our Totex allowance. We're not going down on that. We're holding. Second thing is ODIs. Really strong showing from your official team. To be landing on a third year of ever tightening targets, at least GBP 50 million after pretty record-breaking weather this summer is a strong performance. I guess we're calling that. Of course, we'd like that to be slightly higher. To have at least GBP 60 million, we'd love to see what we can do over the next six months. The last thing is financing. As you say, that is the largest of the three buckets for this year. James, any thoughts on financing? Yeah. Yeah, double-digit RORI. I mean, I think, you know, my colleagues have done a fantastic job on ODIs and Totex, but the reality is it's financing. In a year of high inflation then, it is financing that kind of drives that additional RORI performance. Of course, remember that is because in a year of high inflation, when you've got, you know, only sort of 25% or so of debt index linked, then, you know, that means that you do get that extra kicker in RORE terms when inflation's high. Financing is doing a lot of the work to drive that. When you look at, compared to the rest of the sector, we'll be, you know, I'm confident to give you that confidence to give. I have the confidence to tell you it's gonna be double digit. That's against the backdrop when a lot in the sector are struggling to make the base return. It's gonna be more than last year. I think, you know, overall, we're very pleased with the kind of performance as we look ahead to, you know, what's gonna prove to be a really strong year for RORE. Well, we're not giving you any more than double digit, I'm afraid, Jenny. We're not gonna be any closer guidance than that. Very good. Anything else, Jenny? Or is that okay with you? Thank you. Very good. Dominic, over to yourself next. Hello. Hi there. A couple of questions from me. Firstly, CSOs, I know it's not necessarily an issue for yourselves, but it does seem to me that the regulators are starting to regulate themselves. There's an investigation into the EA. When you look out the sort of five plus water regulators and environmental regulators we've got out there, it does seem to me that there might be a shift in how the water sector sort of shapes up going forward. For example, if you do more and more in river qualities, I'm not entirely convinced that's within the remit of Ofwat. How would you see, how would you see the shape of the regulatory regime going forward in light of the investigations into the regulators and what you do with the blank sheet of paper? The second question is on WACC, which is, I think Ofwat is gonna be publishing a number in December alongside their final methodology. In light of the high volatility that we've been seeing in the markets, do you think they're gonna go for a spot rate or, you know, go for a range or how do you think they're actually gonna sort of navigate around a number that could be sort of wildly different to what it should be? For a long period of time, we've made a call that we're not gonna predict WACC, and we're not particularly good at the crystal ball. It's not a skill we have developed so far in Severn Trent. You know, we look forward to it. It might be as early as December. I don't know whether it is December, but if it is as early as December that we see a draft WACC, then great. I mean, I'll hand to Shane. What Shane, I think, will educate on is it is in the round. We've said this consistently now for two AMPs. It'll be the third AMP we've said the same statement. The WACC is one number, but it is just one building block, an important one, but one building block. Shane, give us a sense of the whole in the round settlement, and then we'll come back to the other regulatory questions. I guess just using PR19 as an example. We had a number of different components. We had the incentive for the IIP. For Fast Track, there was an uplift there. We have obviously Totex, cost sharing incentives, which they apply, and the ODIs and financing as well. I think just the other point on your position. We've got a number of different drivers of outperformance there. In the PR19, they did give a range for the early view. I guess if the past was predictive of the future, that's the pathway they might go. I think we're thinking if it is as early as December, you might get to see a range. Whatever the range is, there's still a long way to go, right? It's earlier than they gave a number last time around, don't forget. There's still a long way, a long runway till we end up. At every price, they always move from the early view as well, right up until the final determination. It is literally just an early view. Very good. On the other point, so it's not by chance that we're in good shape on CSOs. I'm gonna hand to James for a second, Dr. Jasek, just to give a sense of all the work we're doing now even to go even faster. Our performance for this year, as we put in the RNS, is that we're definitely on track for our end of AMP commitment, which is a regulatory set target to be at an average of 20. Actually we're ahead of track, and we've got a year-on-year improvement from last year to this year. Yes, we've got a bit of that has been helped by weather. We've also got an underlying year-on-year improvement based on our own efforts as well. I'll hand to James to talk about all the stuff that we have done and will do on CSOs to bring that average activation level down. I'll answer the specific question about, okay, but what do you think you get a blank sheet of paper? What would you do? Thank you, Liv. Across our estate, we've been really scrutinizing the performance of each individual CSO. We've got some really good data there. Over 90% of our CSOs are fully monitored, and that will be 100% by the end of the year. We've been really focused on gathering that data. That's allowing us to really scrutinize that level of performance and understand where we can make interventions. For instance, some CSOs, we can look at what treatment options we may have for those. Others, we can look at the capacity of the network to really reduce any particular activations we may have come from that area. Others, we're able to make different changes to our network to actually eradicate the need for that CSO. Notwithstanding, we're not gonna be able to get rid of every CSO. I think the numbers that have been publicized reflect the actual challenge of doing that, but we're well on with our journey to achieve an average of 20 activations by the end of the AMP or fewer, and certainly on track for the government target of 10 by 2050. In terms of regulators, I think it typically works quite well to have quality regulators slightly separate to economic regulators. I know that's, you know, this is our view, and if you take drinking water quality, I think having the DWI, which is a group of, say, 20 people, 25 people, tight organization, but they are absolute experts at drinking water quality, it works really well. We quite like having expert conversations, quite geeky conversations. We have that with EA on the environmental and river quality. We have it with the DWI in terms of drinking water quality, and we have it with CC Water, the Council of Water, in terms of customer engagement and how we need to manage affordability and matters like that. We quite like that niche quality conversation. Of course, it's all got to come together into a total bill, and that's where Ofwat, I think, does a good job. Whilst I think, we are seeing a new trend of more analysis on regulatory performance, which is good. I think everything's got to be scrutinized, particularly in a world of increasing bills, and I think everything's got to be scrutinized. Our sense, if you cross compare to Europe, just take two facts. Typically, you'll see bills are probably dramatically lower in the U.K. versus Europe. Average of GBP 1 a day in Birmingham, if you were to be one of our customers, versus GBP 2 a day in Berlin and GBP 4 a day in Copenhagen. If you were to look at, say, drinking water quality, which is something the DWI has really led, I mean, the only country with better actual water quality that you drink out the tap than the U.K. in the whole of Europe is Ireland. It actually has worked over a long period of time. I'm not saying that there won't be a new regime, but I personally would be less keen on everything going into a single regulatory body because you would lose some of that technical expertise. I quite like the fact, and we think we manage that reasonably well as an organization. Here's the expertise, and let's get our experts to work with those experts. I probably wouldn't create mass change with a blank sheet of paper. Very good. Happy, Dominic? That answer your questions? Yeah, it does. Thank you. Good. Okay, Martin, over to yourselves next. Yeah, good morning to everybody. Couple of questions if I can, please. You talked about affordability, particularly in the video that you shared earlier today. Where are we with the likelihood of a social tariff on a national basis in water? I understand some discussions have been going on, so maybe you could provide an update on that. The other question is, you know, picking up on your GBP 1 a day, if you live in Birmingham for water, I think it's slightly more than GBP 1 a day nationwide, but nonetheless not the biggest number out there yet. The water sector does attract a degree of criticism. On one hand, you know, comparative regulation, you know, works very, very well if you inhabit a good set like yourselves. Ultimately, you know, there is a broader industry out there, and some of the narrative hasn't been great. What collectively can the water industry do to get itself in a better place in the eyes of, well, certainly the media and potentially the wider public as well? A great question. I'll start with the affordability one, but I might then hand actually to Jude just to flesh out what we're doing even more than since we last spoke to you. I mean, on the national tariff, I think it's tricky to see it playing out as smoothly as maybe people might have thought a year ago. Combination of there's less legislative time, and it does require more action from government. I think it's also tricky against the context of the fact that bills in other areas have gone up, haven't they? I think it's less attractive for government now to look like it's sharing a social tariff across people that live in different parts of the country. I think personally it looks like it's, you know, it's got quite a high bar to cross. Now so whether it occurs or not, is a bit impossible for us to tell. It's a bit crystal ball-esque. What we're doing though, is we passionately believe with the principles. I think the principle of it was spot on, which is that nobody should fear their bill arriving. At the moment there is a little bit of a postcode lottery that some companies do lots and some companies do less. What we want to do is to set the bar, so if it does arrive, it would almost be seamless for us because we'd already have done more than is being asked. I'll get Jude to talk about how we see that's working and what we've announced since the last time we spoke about affordability. Absolutely. We feel like we really got the timing right in May when we announced expansion of our schemes. We're really on target now to hit that 315,000 people by the end of our AMP that we'll endeavor to support through water poverty and out. Two things I guess that we've done since we last spoke. We've had a really wide, a region-wide campaign that included in-community events. It included radio, included working with a lot of partners. Just as importantly, actually, we've changed the threshold for qualification for scheme. We've made that easier for more of our financially vulnerable customers to qualify. And what we've seen is, you know, an increase in uptake there. We've, as Liv said before, we'll continue to look at that. If we feel that the need is growing, and not shrinking, then we'll reassess, you know, how much more we can help. Really good. On the second part, I mean, I think the narrative for us anyway, I'll ask Neil to comment as well, since he looks after some of our comms and reputation stuff. I think the narrative for us is probably become clearer that we're not all the same. Fundamentally there are behaviors and performance in the sector that we couldn't necessarily defend. Actually, I think there's been some really good honesty from the chief executives of those companies that say openly that they're not comfortable with that performance either, and they believe that their history isn't acceptable, and they intend to fix it. I think that's really good honesty that we are seeing in that sense. You know, we can only deliver our job as a first thing, is to do everything really well. That's why some of the big things we're announcing today are important. 85% of the measures are green. On track for the fourth year of four-star status. No one's asked that question yet, so I'll put it in. That is a real pride point to be calling that at this stage of the year. Best ever pollution performance in our history. On track for halving, and that's obviously one of the big topics of the day. Firmly on track for the Ofwat target on CSOs, which other people are probably fighting against as a target. We're embracing. The river pledges all on track since we launched in March. They're still setting the standard for the sector. I think we kind of say plan A is do all the stuff in our own areas, but then plan B, of course, is to try to improve the sector reputation. I'll pass on to Neil for any comments he wants to make around that. Yeah. I think that's broadly right. I think, you know, the narrative is that the sector is all the same, and we know through the performance and the measures that that isn't the case. Why is it important? Because high performance should, calling out high performance and calling out good performance should drive others to improve as well. I think it's also important to try and broaden the narrative the way the media particularly has been focused on one or two small things. I think, you know, some of the work that we're doing around the multiple stakeholders, so the work that we're talking about today in terms of community and society is really important as well, because it shows that regional companies like Severn Trent can play a bigger role. I think, you know, broadening that out and being specific about the difference between high and low performance is really important. Very good. Martin, does that answer the questions? Yeah. That's great. Thanks. Very good. Okay, Peter, over to yourself next. Oh, sorry, I think you're on mute. 2020. There we go. Oh, no. He's like, literally, that's it. Peter has left the room. Okay. We'll see who's next. I think that's an old handsome Martin. There we go. Over to Mark. Very good. Hello, how are you? I'm good. Thank you very much for taking my questions. Firstly, a question for you, James, on the amount of refinancing that you've got to do over the coming two years. I mean, clearly I think on the slide, I believe it was slide 12 where you put up some key indicators, but in terms of how much issuance you need to do, and I accept that's within the cost of debt tracker, but just looking holistically at how much you need to hit the markets for. Secondly, a question for Shane, just on real price effects. I accept that, you know, you talk, I think you give a statistic 70% of the TotEx is fixed out. You went early to the supply chain secured resource. The costs have gone up, and they haven't gone up just in line with CPIH. Could you give us an indicator of what, you know, if you were to reprice your Totex program today, what, if you like, the real price effect and the real inflation that you would be seeing, certainly as you move into the next AMP? Thank you. Very good. Let's start with James. Yeah. In terms of refinancing, James. Yeah. We've already raised around GBP 2.5 billion already this AMP in the first 2.5 years. That's gone extremely well. We raised GBP 400 million in the last year alone. When I look ahead over the balance of the AMP, there's about just under GBP 2 billion of new debt to raise for the balance of the AMP. Of course, you know, as you point out, it is more expensive to borrow money today than it was even a few months ago. The iBoxx allowance for new debt, you know, does give you really good sort of protection from a regulatory perspective. Even though our cost of debt is rising, the iBoxx allowance that we get is rising as well. As I pointed out in my presentation, so far this AMP, we've actually been outperforming the iBoxx by around sort of 24 basis points. You know, our sort of new debt has been around 24 basis points under the iBoxx. I feel confident looking ahead that we can continue to deliver outperformance on financing, for our investors, for the balance of that new debt that needs to be raised. Very good. If I take your question, Mark, the second question, I divide it up in two ways. I think there is, how does the regulatory model work? If prices go up, then what happens? I think Shane can talk to that. I think it's important to understand that, and I'll get Helen to position the next part, which is I think your question is, yes, we went early, actually we're locked within the kind of, like, the cost allowances. I don't think it's quite. I mean, that's true that it's one of the four reasons that we've done well is we had a fast start. There are three other reasons why we're still managing to deliver the cost allowances, and we're still confident that we'll live within whatever the cost allowances are for the next AMP as well, and we'll talk through the stuff that we've done to get ourselves in that shape, and I'll ask Helen to cover those off. Shane first. Just briefly, the base models rely on the whole premise that the past is predictive of the future. Ofwat's cost models use cost since 2011, 2012 for wholesale and 2013, 2014 for retail. The higher costs that we're seeing at the moment in energy, chemicals, labor, and obviously capital will flow through into the cost models. When Ofwat re-calibrates the models for PR24, it'll use these higher inputs, and that will flow through into more generous base allowances, everything else being equal. It's also true that if others overspend in the sector, isn't it? Yes, precisely. It doesn't differentiate between what the source of that, of the higher spend is. They look at it in aggregate then use these predictor variables there like length and main other things. Very good. Helen, what are we doing rather than just being a bit lucky by going early? What are the things that we're actually doing to manage our costs? Not only did we go early in respect of Fast Track, but we also, you'll remember, we accelerated design during COVID. We continued delivering on site where we were present, and we also fast-tracked some of our design because of this capacity in the market because a lot of others stopped. That was to our advantage. The advanced procurement that's mentioned in the video, that's something which we, again, we went very early on. We bought critical components like dosing rigs that we use in water and in waste and secured the manufacturing slots, which protects our program as well as has saved us money. Insourcing of design is a huge benefit to us. The reason for that is because there is a lack of capacity in the market. Again, we've got a resource that we can do. Importantly, in this current climate, it's enabled us to value engineer our schemes in a way that would be much more difficult to do if you were outsourcing that design. My team have worked very closely with Bob, our Chief Engineer, to do that, and we can probably talk about an example of that, Bob. Importantly, we have also significantly expanded our supply chain. We did that at the start of the AMP, but we have then gone further with developing tier two and tier three suppliers, which gives us more capacity, but also they tend to be smaller, lower overhead, and therefore cheaper. We've also created a new framework of around 50 to 60 suppliers to enable us to access more delivery capacity and again, bring more competition into our commercial negotiations. There's a whole host of things that we've been doing to not only deal with the cost issue, but also ensure that we deliver our program. I think that's critical actually, to hand over to Bob to give an example, because if you think about next AMP, Mark, then you've got to make sure you can still deliver, even if inflation were to stay high, you can still deliver. Also, we're expecting to see long-term RCV growth, and that long-term RCV growth, it requires delivery, it requires a supply chain. We want to be able to step up. Having seamlessly gone from the core program to Green Recovery, we now want to go from an AMP7 rate to whatever is the AMP8 investment rate, which is likely to be higher again. Bob, do you want to give them an example of value engineering? Yeah, sure. We've got a really good triumvirate going actually with James Jessop's operational team, Helen's capital delivery team, and my chief engineer team. I guess an example is somewhere like Lower Gornal sewage works, where we the standard solution was gonna be to close it down and pump it to a nearby larger work. You may notice that the pipeline costs are huge at the moment, HS2, and all that stuff. We reframed the problem. We got our process experts involved, and we found a way of actually reusing our assets on-site using some of the innovation from our test bed in Fernhill. It's been a really good example, and we do that quite a lot as a group. Mm-hmm. Brilliant. Does that bring to life the answer, Mark? It does. Thank you. Just a follow-up for James. The two and a half... There's a lot of notes there I was taking. two and a half billion in the first two years. You've got another how many to do? GBP 2 billion for the rest of the AMP. Does that include, you know, the bit at the end of this AMP that you would need to raise for 2026? Or is that just a GBP 2 billion you'd need to raise in the next 18 months to keep yourself a finance for this review and sign going concern and keep your headroom, et cetera? Yeah. That just covers AMP7. That it's for the remaining 2.5. Don't forget, the reason we do that is 'cause you've also got the GBP 1 billion RCF that you can call off. Yeah. effectively the way we view it. Yeah -is rather than thinking about, okay, you've got to do this AMP and another GBP 1 billion for the first year of next AMP. Don't think of it that way, 'cause you've constantly got the pre-negotiated RCF- Yeah that you can call down. Think of it not quite as a hard stop. I think we sometimes get obsessed with the AMPs as being a hard stop. I think it bleeds a bit more across. I think, you know, over the next sort of 18 months, we're gonna get more visibility about what AMP 8 is looking like and what the investment plans are gonna be. I think, you know, the treasury team will start rolling into action, you know, when we start to see those plans in terms of thinking ahead into AMP 8. Need to do two, would be nice to have 3.5. I don't think you said that, Mark. I think you said you need to do two, and if sometimes we go slightly early, so the market's more favorable. Yeah. Sometimes we can use the RCF and go slightly later. I think what we've proven is little often, that's what James has done a brilliant job, is regardless of the market conditions, in a low inflation era, James outperforming the market. In a high inflation era, James is outperforming the rest of the sector. We're confident. We've got a very active treasury management, and that we'll take the right strategy for the right moment. You remember we floated for a while when that was good. We then fixed in, we low index linked. I think assume that we've got an active conversation rather than there is a set plan to and argue that. Yeah. Thank you. Very good. Peter, we're gonna try again. Is it gonna work? Yeah. I'm hoping you can hear me this time. Amazing. Thank you. All right. Sorry about that earlier. Two questions if I may on power price exposure. First one, your technical guidance implies that the net GBP 50 million impact from higher power prices is unchanged since you reported full year results, and that's despite a doubling of the costs for your regulated business. I'm wondering how you've achieved that because your power sales I think are only half of your power consumption volume. I get you've got an economic hedge, but I'm just wondering how you've managed to keep P&L neutral in terms of your technical guidance. The second question on liquidity in power markets. Are you actually still able to hedge, or do you have a larger amount of spot exposure, both on the cost and revenue side as we go into next financial year? Finally, I'm wondering if you have any visibility yet whether you'll be impacted at all by the windfall tax on power generation that was announced last week. Thank you. Very good. Three good questions. All for you, Jimbo. Okay. On the tech guidance, I'm really pleased. At the beginning in May, we kind of gave some guidance that said that we thought the net impact when you take into account all of the kind of various moving parts through the P and L would be around GBP 50 million. I'm really pleased to confirm, despite probably one of the most interesting years so far in terms of energy prices, really pleased to be able to reaffirm that guidance at the half year stage. The way we do that, of course, is I know as you said, you know, we do have around 50% self-generation. That really is the differentiating feature for Severn Trent is we do have that high level of self-generation. That provides us with, you know, a really significant amount of protection, both for our investors. Also it gives us that base protection when we look at the impact on the P&L. Of course, what we then do is we top up using hedging in the market or financial hedges to make sure that throughout the year we can protect that P&L position. That's why, the guidance hasn't moved, albeit revenue's slightly higher and costs are slightly higher, but that GBP 50 million delta this year to next year in terms of the fee but impact has remained unchanged. It's all to do with the- It's also because Green Power's had its best year. It has. Absolutely. Green Power's had a fantastic year. If you look at our business services division, it's delivering GBP 31 million of EBITDA, a large chunk of which is the is what's happening in Green Power. There'll be more to come in the second half, hence the guidance. In terms of liquidity, can we still hedge? Yes. That's, you know, the short answer is, yes, we can. In fact, we started, I think, this financial year 90% hedged for the year we're in currently. I think when we look into the next year, we're already at around 85% hedged for next year. There hasn't been any issues hedging forward. I'm not particularly liking the pricing. It's probably... It's certainly more expensive than it was last year. We're well covered for next year. When I look at the windfall tax, really good question. We've only seen guidance so far, but a couple of takeaways I guess I'll share with you. The first thing is, the good news is around three-quarters of our energy generation absolutely isn't in scope, and that's because a large chunk of what we generate is now in gas format. Of course, gas is excluded. It's an electricity levy, not a gas levy. We've also got a large amount of actual genuine self-supply, you know, within the boundaries of our works. Of course, that's out of scope as well. The remaining quarter, we're still kind of looking at it. I think, it depends on the definition of biomass and renewable energy and whether food waste is in scope of that. We think there are some good reasons why it should be treated differently. Too early to give a definitive answer until we've seen the full technical information. Yeah, it's certainly not impacting the quality of our economic hedge going forwards. Very clear. Thanks, James. Very good. Seem to have answered your question? Good. It doesn't me. Okay, Dominic. Back to yourself, Dominic. Hi there. Yeah, I'm quite happy to be put off if anybody else has got questions, but just another couple from me, please. I mean, first one, is it possible to give us some color around your pension position, particularly in light of the LDI issue in this autumn, and whether or not you managed to get through that one unscathed? When I was comparing your pensions with your peers, could you explain why your life expectancy is sort of three years less than it is, say, for the other water companies? That's one. The second question I've got is about Jenny's question, I think, at the start, which was on the cap collar and the ROREs and all the rest of it. We obviously look at everything in real terms, but in nominal terms, I presume you're going to be making returns closer to 20% + on equity. I think Unite, the union came out a couple of days ago and said they thought there should be a windfall tax on electricity networks. Is there anything out there or conversations that you're having that actually, in nominal terms, these returns look pretty high and that there's some sort of sharing with consumers to conversation to be had? Thank you. I'll take the second one, and then, and I know that James will come in on pensions. I mean, I think it goes back to fundamentally, it's very different in energy in terms of returns. If you look at the super normal returns that are being seen by energy performers, they've got almost like the same running costs, the same basis of life, and then extraordinary returns. We are not seeing that. If you look at our year this year, then energy is our second highest cost. We're having to swallow what is dramatically higher energy costs, dramatically higher chemical costs, a tight supply chain market, still and actually then help customers more than ever for affordability. I think the returns being made are very different in water to energy, which is why the conversation's not the same. Even when we look at the electricity levy, as James has said, you know, when we look at it, our first read is that it doesn't actually impact the same reasons because you don't have a super normal. Even in food waste, which is badged into electricity, actually the food stock's different, the cost of running it is different because of energy. Even then, it's quite a different proposition. No, we're not in any conversations with anybody about that. I think actually the evidence is quite strong that the model holds in all the scenarios we've seen so far, but it's still requiring lots of management. I think it's probably unfortunate you're seeing just our results today. When you see the whole sector's results over the course of the next period of time, I think that'll put those results in stark relief as well, is that the good companies might be performing very strongly. The vast majority of the sector is struggling to make the basic return, and particularly in this high-cost-base era. James, I think we definitely came through unscathed. That's good. Yeah. I think actually a decent set of announcements to impact it. It was an interesting couple of weeks. It feels like a long time ago. Yes. I mean, I think the key takeaway for us is that, I think that the big news from my perspective is to agree the 2022 valuation. That is really good news. That gives us certainty certainly over the next three years until the next triennial valuation. And then beyond that as well, I think we've got really good visibility. I mean, we've come a long way on pensions, right? If you go back sort of five years, post kind of the Brexit vote when our deficit was in the sort of GBP 700 million, I think we've come a really long way. We're continuing on that steady progress towards, you know, getting to a position where, you know, it is, you know, that, you know, the, you know, the deficit kind of has come down to nothing. We're on that journey. I think we're now looking ahead at a situation where it could well be, it's likely because of the way the actuary sort of prudence works, that actually we could be in a position, you know, where there is, you know, where the actual, you know, the scheme is has got moves into a surplus. What we've done is we've agreed heads of terms to make any contributions that we make in AMPAY actually returnable in the event as and when the fund moves into surplus. I think that's a key kind of improvement we've made for this triennial valuation. That's something to look forward to, I guess. Very good. Thank you very much. It's Verity next. We've not had you before today, Verity, for questions. Over to Verity. Yeah, just a couple actually, thank you for the presentation. The first one is on non-household retail. You've broken even. Is this the beginning of a much higher trajectory, or are you now gonna run into recessionary pressures on non-household customers? Secondly, just an observation on costs. I notice your hardening contracted are up 80%. Is this one of the tools that you're using to kind of get your labor costs down, which obviously were down 5.5%? Is that just because of the dry summer, or is that a tool that you're using? Thank you. Very good. I mean, that's IRE investment spend, isn't it? James, do you wanna cover off on the hired and contracted? Yeah. It'll be a combination of hired and contracted. I mean, you can see that, you know, there's quite a lot of activity going on across the piece in terms of Green Recovery. Lots of HS2 diversions work. There is quite a lot of additional work, and when some of that is temporary, you know, we will use hired and contracted to fill that gap. I think the way I'd do it, Verity, is overall costs are in good shape, hence the fact that the TOTEX is in good shape. If we think it's a permanent cost that we're gonna do for evermore, we'd rather in-source. We'd rather have those people ourselves. If we think that it's say for a period of time, Green Recovery investment is a good answer. Likewise, I think some of the work on biodiversity, we've spent quite a bit of money on the biodiversity ODI this year. That again, it's planting trees, it's kind of work of that ilk, which isn't necessarily a permanent resource activity for us. You're seeing those types of costs. It was also expected this year we would spend more IRE. If you look actually at the profile we set at the start of the AMP, we were meant to spend more this year because we do buy in some extra work on the waste network, and that was always predicted to be in this year to get ourselves in great shape for the end of AMP expiration. It's like James said before, the ODIs do get harder every year, and as they get harder, some years you kind of like do a bit of a step change in a couple of measures to get yourself on the right runway for the future. Certainly, we've got a couple of measures we're not having our performance on, as we've said openly, 20 out of 33 green, five still to work on, and we've spent a bit more money on those in the first six months to get them onto a better trajectory. Yeah. On the, on the first of the questions then, I mean, the non-house hold market, we've always said, and I'll let James jump in a second. Yeah. We've always said it's tiny, right? It's a tiny percentage value of the overall business. It's great that Water Plus is now into positive. Gosh, in the same way as when it wasn't positive, I get reassuring you, it's a small percentage. It is kind of like a well-managed situation that is just a frustrating market dynamic. Please don't suddenly get wildly excited about it because it has broken into that positive territory. It's still a very small part of our business. It is. James. It was. We were pleased to see it return to profitability. I think the thing to keep in mind, it is a pretty low-margin business. As Liv says, it's a very small part of our business, but it is quite low margin. As you rightly pointed out, I mean, we are, I guess, looking into recessionary times. I don't think it's, you know. It's gonna be tough times, I think, for all retailers, including Water Plus looking ahead. That's just because, you know, the economic environment is looking like it's gonna get a bit tougher. Very good. Okay. Verity's nodding. That looks good. Right. I can't quite see who's on our screen. It was Ahmed next, I thought. It is Ahmed next. Yes. Hi. Morning. A few questions from my side. I was just hoping if we could get some sort of thoughts from you on the operating cost trends for next year. As I see, the guidance for this year implies about, I think, a GBP 100 million increase year-over-year, and I was thinking, you know, if there's any commentary you can share how you expect this to be in the next financial year. Secondly, interested in some commentary from your side on bad debt collection and if there's any change in the provisioning policy behind it. Finally, just a follow-up question on the power cost, because I, as I understand, you obviously you have a short position or you are net user of power, but you're obviously able to keep the guidance, the previous guidance intact. Is that because of a mismatch between hedging policy or is there some sort of financial overlay, some sort of trading optimization as a result of which you're able to sort of keep those costs constant versus the previous guidance? Thank you. Think about the last one. I'll just jump on the last one, then I'll let James jump in on the two. I mean, we were probably slightly cautious in our first guidance, right? It's probably where it is. We've probably benefited a bit from James being slightly cautious in the first number he gave. We've definitely given the teams, operational teams a lot of help and coaching on use less power. We've seen how expensive power is. There's been a big campaign running across the organization. There's been original usage numbers we've definitely been able to bring down, and we're confident in keeping that down going through the winter. There's probably a bit of confidence that some of the campaign activity and investment we've made in the first half of the year will continue to flow through for the rest of the year. There's a bit of that. Helen's team are doing a really good job to make even more, which helps the hedge upside in terms of what we thought we'd get out of the asset to the Green Power stuff. It's a kind of a combination of a few things, which means that you might have thought that the power guide was gonna change, and actually it held, but it's a combination of that. Yeah. I mean, the hedging we put in place is precisely to maintain that PBIT position. You know, that's what we do. We have a combination of that self-generation, which gives us that kind of base hedging, if you will, that gives a significant amount of protection, you know, for our investors when you look across the whole group. In terms of the PBIT for the year, we work hard, you know, with our hedges and our self-generation to make sure that we can hold that guidance throughout the year. That's despite, you know, significant volatility in energy prices. It's working absolutely as intended. We're not giving any guidance just yet. You have to wait till May, until we kinda look ahead into costs. I think there's some, you know, fairly big moving parts at the moment, you know, that we'll be working through, and you can look forward to guidance on next year's costs when we come back and see you in May. The only guidance we have given, just to manage, I guess, expectations, is that we've said we're confident in our Totex budget over the course of the AMP, right? I think what we're saying is you can expect that energy is likely to stay up for the rest of the AMP, but we've managed that with economic hedge. We're confident that we're able to manage. Don't forget, we do get given the inflationary costs. When we're giving you this kinda sense of, yes, you can expect there's moving parts, and yes, you can expect there's still gonna be some likely high costs, we are given an inflationary increase by Ofwat, and the vast majority of those costs that do tend to move up are covered by that inflationary link. The two things I would take as the macro is the first thing is we are good at managing costs. We've got a strong track record of that. The second is we're calling confidence for the five years still. I'd take confidence in that. I guess in terms of specific guidelines, I think we'll have to wait till May. Yeah. till we begin to break it down for you. In May, we'll break it down in terms of as we normally do for the guidance that we normally give. On the bad debt. Yeah. I mean, that continues to be a good performing-. Yeah, they have. Collections have remained healthy throughout the period. I mean, one thing to keep in mind, we do have a kind of a, you know, a built-in benefit. Our bills are very low, as we've said. You know, they're around GBP 1 a day, which I think means that, you know, in terms of household expenditure, they are a much smaller component of the kind of utility basket than energy and gas, for example. We work really hard to make it easy for our customers to keep on top of their bills. That's one of the things that we, you know, that we have I think really done well on over the last few years. If you take direct debit penetration, for example, which is a really good way to keep on top of your bill, around 75% of our, of our, of our collections are done through direct debit. We also of course work really hard to make sure that we help our customers before they get into difficulty. I guess I'll hand over to Jude to talk about some of the, you know, the things that we've been doing over the last year or so to really make that difference. Absolutely. I think in the debt space in particular, you know, we've got a really maturing approach to how we handle debt. We've really focused on customer journeys and segmenting our base and making sure that we have the appropriate treatment for the group of people that we're tackling. That's really worked very well for us. We'll continue to do that. As James said, you know, preventing our customers getting into debt is our primary focus, and we believe the affordability scheme that we expanded early on this year has gone a long way to keep out of debt some of our most vulnerable customers. No extra provisions planned as it stands now. We feel that we've got ourselves properly covered, and we're in a prudent position around it. Yeah. Very good. Okay, I think that might be it for questions. Is it? Very good. We'll just get one last second just to see if there's nothing popped up online. In which case, a massive thank you very much for dialing in today, and we look forward to seeing all of you soon and appreciate the hard work from the team around the table over the last six months to land what I think is a really robust operational and financial performance. Thank you very much. Thank you.