Water group warns on energy costs

THE parent company of Essex & Suffolk Water warned yesterday that increases in energy prices would add more than £8 million to costs this year.

THE parent company of Essex & Suffolk Water warned yesterday that increases in energy prices would add more than £8 million to costs this year.

Northumbrian Water reported better-than-expected profits of £170.3 million in the year to March 31, up 15.2% on the previous 12 month, helped by a 6.1% increase in revenues after the firm was allowed to raise its prices to support capital investment programmes.

Operating costs within the group's water arm were £1.4 million lower than estimated to regulator Ofwat in 2004, but Northumbrian said this reflected last year's decline in energy prices which had now reversed, with almost doubling on February 2007.

“This will add more than £8 million to Northmbrian Water Limited's operating costs in 2008-09, despite continuous efforts to minimise energy usage,” it added

The Northumbrian group serves 2.6 million people in the north with water and sewerage services and a futher 1.7 million people in Essex and Suffolk with water services.

Operating costs at the group's regulated business increased from £353.1 million to £356 million in the year to March, while it increased capital investment to £232.6 million from £225 million.

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The company said it had achieved its regulatory target for reducing leakage, with the rate in its southern operating area amongst the lowest in the country. It also said the Consumer Council for Water's annual survey of domestic customers showed the company scored the highest levels of customer satisfaction in England and Wales.

Ofwat is due to reset water tariffs from April 2010 onwards towards the end of next year.