Severn Trent Plc, the U.K.’s second-biggest water company, kept an outlook of sales falling by as much as 25 million pounds in the fiscal year ending March 31st. Sales will be lower because of a “decline in consumption across our measured income base,” the Birmingham, England-based company said today in a statement distributed by PR Newswire. This figure excludes sales from unregulated activities, which account for about 15 percent of total revenue. Severn Trent said in January water consumption had fallen more than previously forecast, mainly because of reduced commercial demand. Its commercial customers included collapsed U.K. retailers Woolworths Group Plc and MFI Retail Ltd. The water industry is undergoing a pricing review, which will set tariffs and spending levels for the five-year period from 2010. Water companies in England and Wales will submit final business plans on April 7 to Ofwat, the industry regulator. The companies submitted preliminary spending plans last year, which Ofwat later said needed to be reduced. Severn Trent’s preliminary capital expenditure estimate was 3.2 billion pounds during the five years from 2010.

Ofwat will establish price limits for each company in a so- called final determination in November. The rates customers pay will then be calculated according to that limit and inflation. The inflation figure is reviewed annually by the regulator. Severn Trent supplies water and sewerage services to more than 3.7 million customers in the Midlands and mid-Wales areas. It posted profit last year of 209.5 million pounds. United Utilities Group Plc is the largest U.K. water company by market capitalization.

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