11th Aug 2008 07:00
United Utilities Group PLC
11 August 2008
UNITED UTILITIES WATER PLC DRAFT BUSINESS PLAN 2010-15
United Utilities Water PLC today published its draft water and wastewater business plan covering the 2010-15 period. This plan has been submitted to Ofwat as part of the 2009 water price review process and builds on the company's strategic direction statement published in December 2007.
The total capital investment programme contained within the plan, including infrastructure renewals expenditure, is approximately ‚£4 billion (2007/08 prices), comprising approximately ‚£1.6 billion for the water service and approximately ‚£2.4 billion for the wastewater service. Investment to meet regulatory quality standards, enhance our service to customers and maintain the supply/demand balance is forecast at around ‚£2 billion, almost half the total programme.
The 2010-15 capital investment programme, which takes account of the geography and history of the north west region, aims to meet existing standards of service, address new, higher quality standards and tackle the challenge of climate change. It also includes investment for issues first identified in previous price reviews where the clear need for investment has only recently been confirmed. This includes a programme of work to deal with unsatisfactory intermittent discharges.
United Utilities Water expects to improve its efficiency across the 2010-15 period. The company is aiming for a 1.5% annual improvement in its underlying operating efficiency, although operating expenditure is likely to increase overall due to cost pressures in areas such as power and rates. United Utilities Water is also targeting an average improvement in efficiency of 3% in respect of its capital investment programme.
United Utilities Water estimates that to finance this plan an average real, fully post-tax return of 4.7% is required. This compares with a cost of capital of 5.1% assumed by Ofwat at the last price review in 2004 and reflects the sustained reduction in the cost of debt finance available to the water sector. The company will, however, wish to reassess its financing costs at the time of its final business plan submission to Ofwat in spring 2009, in light of financial market conditions at that time.
To deliver this plan, United Utilities Water proposes an average annual real price increase of 2.7% across the five-year period, although average household bills are expected to increase by just over 2% in real terms on average each year. The company believes this is consistent with the aim set out in its strategic direction statement that bills, on average, should rise no faster than medium term household income growth.
The draft business plan can be viewed on United Utilities' website at www.unitedutilities.com.
United Utilities expects to receive feedback from Ofwat on its draft business plan in the autumn and is scheduled to submit its final business plan in April 2009.
United Utilities' contacts
For further information please contact:
Philip Green, Chief Executive +44 (0) 1925 237000 Tim Weller, Chief Financial Officer +44 (0) 1925 237000 Gaynor Kenyon, Communications Director +44 (0) 7753 622282 Rob Hughes, Investor Relations Manager +44 (0) 1925 237019
Dominic Fry/Tom Murray, Tulchan Communications +44 (0) 20 7353 4200
United Utilities Group's ordinary shares trade on the London Stock Exchange and its ADRs, each equal to two ordinary shares, trade over the counter under the Trading Symbol "UUGRY".
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