Water company's own power plants will boost profits

Jun 4 2009 by Andrew Mernin, The Journal

It also plans a £36m improvement to its sewage treatment works at Howdon which will generate a significant amount renewable energy. Managing director John Cuthbert, who will retire next spring after more than 20 years in the industry, said: “We are looking to de-risk as much as we can and are investing to remove our exposure to external markets.

“By generating more and more of our energy ourselves it reduces exposure to the energy markets and our costs.” He said it was difficult to predict whether demand from recession-hit industries was likely to pick up in the coming year. “We have seen volumes of demand fall by 4%. Being realistic, that trend may well continue for a period of time. I don’t think it will continue for a long time, but in the short term you have to be realistic.”

Meanwhile, Northumbrian Water has asked permission from regulator Ofwat to raise household water bills well above the rate of inflation – about £25 a year. Ofwat’s decision is due in November.

In return, Mr Cuthbert said customers could expect more cash to be poured into the network to improve water quality.

Like all water companies, Northumbrian is awaiting guidelines from Ofwat which will set maximum charges for 2010 to 2015.