Water firm battles for Cumbrian flood victims

Nov 26 2009 by Iain Laing, The Journal

THE water company whose customers have been hit by the Cumbria floods has said it is battling to bring communities back to normal.

United Utilities has had hundreds of engineers working to maintain power and water supplies since the floods hit last week. The firm had restored power to 650 properties by Tuesday evening – mainly in worst-hit Cockermouth – although engineers are still carrying out house-to-house checks on those homes affected by flood water.

Chief executive Philip Green said: “This remains a very difficult time for our customers and we will continue to work hard in the affected communities in the aftermath of the floods.”

Around 5,000 of its customers were affected by the extreme weather.

Mr Green said the company’s previous planning had limited the financial cost to the firm of the floods to “a very small number of millions”.

He added that the company had restored water to all homes and power to almost 90% of homes by Monday morning and said: “The cost principally in Cumbria is to the community and these are the people we feel desperately sorry for.”

Warrington-based United is the UK’s largest listed water company, providing supplies to seven million people across north west England.

At the operating level, the group said it had produced a “sound set of results“ in a challenging economic climate.

United’s underlying profits edged 1% higher to £369.9m in the six months to September 30 – broadly in line with City hopes – and expects to carry through the performance to the full-year.

Price rises of 6% brought in by the company in April were largely offset by lower demand for water supplies due to the recession and the impact of rising bad debts.

The proportion of bad debts as a share of its revenues rose slightly to 3.6% compared with 3.4% in the year to March, while the company also faced a 10% hike in power costs – increasing its energy bill by £4m.

United, like the rest of the water industry, eagerly awaits the final decision on prices for the 2010-15 period due from water regulator Ofwat today. The company put in for price increases, but was asked by the regulator to cut household bills by 5% in real terms over the five-year period.

Earlier this week Northumbrian Water saw its first half profits rise 12.8% to £87m despite taking a £1.7m bad debt hit from the collapse of chemical giant Artenius’ Teesside plant. Its jump in profits was mainly due to lower interest rates on its index-linked bonds.

Ofwat has limited the company to a £3 increase before inflation but Northumbrian wants to hike bills by 3.4% a year over the rate of inflation for five years to fund its £1.2bn investment programme. That would mean household bills rising around £25 by 2015, from the £297 average now to £322.