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Severn Trent sees softer-than-expected impact as declining non-household consumption stabilises

British utilities major Severn Trent (LSE: SVT) said that declining consumption among non-household customers has stabilised, and it therefore believes its revenues will be less affected than previously stated. The FTSE100 constituent now estimates a £5 to £10 million negative impact on its revenues for the current year, compared to the £15 to £20 million previously indicated.

Additionally the company said it was trading in line with expectations during the period since its interim report, from 1 October 2009 to 25 January 2010.

Although recent weather conditions has impacted on operations, with a prolonged period of freezing temperatures causing increased leakages, the additional repair costs are not material in the context of total annual operating expenditure, Severn Trent said.

The company intends to continue monitoring future developments closely, with the current bad debt level remaining at around 2.3% of turnover. Operating expenditure and capital expenditure continue to be in line with expectations for the year and the current AMP4 investment period.  Net capital expenditure for the year will be around £610 to £630 million, in line with expectations. Also during the period, Severn Trent Water accepted Ofwat's final set of proposals for the 2010-2015 regulatory period (AMP5).

Disclosure: The author holds no positions in the company