United Utilities Group PLC is the UK’s largest listed water business. The group owns and manages the regulated water and wastewater network in the North West of England and also applies its core skills to operate water, wastewater, electricity and gas networks in competitive markets, principally in the UK.
United Utilities reports through three business segments:
- regulated activities;
- non-regulated activities;
- other activities (includes the group’s central costs and property business).
Regulated activities
Key facts
- 95 water treatment works
- 184 reservoirs
- Over 1,400 kilometres of aqueducts
- Over 40,000 kilometres of water pipes
- Over 57,000 hectares of catchment land
- 582 wastewater treatment works
- Over 43,000 kilometres of sewers
- Serving a population of seven million people
UUW holds licences to provide water and wastewater services to a population of approximately seven million people in the North West of England.
Almost 2,000 million litres of water is supplied every day to approximately 3.2 million homes and businesses. Water is sourced from catchment land and is collected and stored in reservoirs before being treated and then delivered via a network of pipes to homes and industry. A large proportion of the water supplied flows freely by gravity and does not need to be pumped.
Wastewater is collected using a network of sewers and treated before being returned safely to the environment. A by-product of the treatment of wastewater is sewage sludge, which is treated further to produce an end product suitable for recycling.
UUW is regulated in terms of both price and performance by an independent body, Ofwat, which sets price limits every five years for the water sector in England and Wales. Current price limits were fixed in 2004. Ofwat is due to publish its final determination of price limits for the period 1 April 2010 to 31 March 2015 in November 2009. Once Ofwat has published its final determination, water companies have two months to decide whether to accept the determination or instead to have price limits referred to and set by the Competition Commission.
Consistent with the group’s approach to longer-term asset planning, the needs of the North West region to 2035 were considered in UUW’s strategic direction statement, ‘where we are heading’, which sets out its plans for the next price review period (2010-15) in a longer-term context. The six key elements identified in the strategic direction statement are:
- Responsible stewardship of water and wastewater networks;
- Listening to customers and other stakeholders;
- Ensuring water resources are more sustainable and resilient;
- An integrated approach to drainage to reduce the threat of flooding;
- Reducing significantly the carbon impact of activities; and
- Bills to rise, on average, no faster than incomes.
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In the 2005-2010 period, UUW is investing more than £3 billion to improve the water and wastewater infrastructure and the environment across the North West. Further developments in the regulatory regime are expected to take effect in the next few years, in particular as a result of European Union environmental initiatives (including the Water Framework Directive, the Drinking Water Directive and the Environmental Liability Directive).
Since privatisation in 1990:
- Water quality in the North West region has improved from 99.6 per cent to 99.9 per cent;
- Compliance with bathing water standards across the North West has risen from just over 30 per cent to more than 90 per cent;
- Leakage from the network has halved, supported by ongoing investment in replacing ageing water pipes; and
- UUW has invested more than £4,000 for every household in the North West, some £750 above the national average.
Non-regulated activities
Major contracts – description
- British Gas Trading – meter installation services
- Dwr Cymru Welsh Water – water and wastewater services
- Electricity North West – operational and maintenance services
- Northern Gas Networks – operational and maintenance services and supporting its capital investment programme
- Scottish Water – supporting its capital investment programme
- Southern Water – supporting its capital investment programme
As well as owning and managing the water and wastewater network in the North West of England, United Utilities also applies those core skills through outsourced utility contracts, now serving more than 20 million people, principally in the UK.
The group has major contracts with Dwr Cymru Welsh Water, Electricity North West, Northern Gas Networks, Scottish Water and Southern Water. In addition, United Utilities has a meter installation contract with British Gas Trading, as well as three Scottish private finance initiative operations, relating to water and wastewater infrastructure.
Existing overseas water and wastewater operations are managed through a number of subsidiaries and joint ventures in parts of Australia, Bulgaria, Estonia, the Philippines and Poland.
United Utilities continues to seek asset-light opportunities by leveraging its core skills in areas that generate additional shareholder value with little impact on the risk profile of the group.
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