Friday, 29 May 2009

United to sell waste gas to National Grid

United Utilities (UU), the UK's largest listed water company supplying seven million people in the North West of England, is planning to sell surplus gas to the National Grid.
United is a big user of energy, mainly for pumping, and consumes about 0.3 per cent of the country's electricity. To help to cut carbon emissions and fuel costs, UU is stepping up investment in combined heat and power (CHP) engines. They use the methane gas by-product of wastewater treatment to generate electricity to power sewage works.
Philip Green, chief executive, said that he hoped the company would shortly be in a position to make an announcement. “We are already a leader in this area and are looking at whether we can put gas back into the National Grid from our processing plants as well as using it ourselves,” he said.
The company, which predicts that its fuel costs could rise 10 per cent next year to about £60 million, is also investigating the use of wind power. Mr Green said: “We are one of the industries most affected by climate change. Changing rainfall patterns and increased chances of flooding will have a big impact on us.”
In future, water companies will need to play a greater role in planning for, and mitigating, urban flooding. Like all water companies, it is facing tough new European environmental directives that cover areas including sewage sludge and urban wastewater treatment.
Mr Green said he expected that 40 per cent of infrastructure spending of about £3.7 billion between 2010 and 2015 would go towards meeting new environmental standards. United reported that pre-tax profits for the year to March 31 were up 11 per cent at £529.8 million, with tight cost controls helping to offset higher depreciation, rising power costs and lower water demand as industrial users scale back production.
Revenues from regulated water activities increased by 6 per cent to £1.5 billion after Ofwat allowed the company to increase its prices by 7.8 per cent last year to support investment in infrastructure.
Capital spending in the year, including £118 million of renewals expenditure, amounted to £740 million in the 12-month period.
The company warned that it may have to pay an extra £25 million to £30 million a year over the next decade to make up its £213 million pension deficit. United proposed a final dividend of 22.03p per share, in line with its policy, and added that it expects to grow dividends for 2009/10 by 5 per cent.
The company has kept bad debts, at 3.5 per cent of regulated revenue, at the same level as last year. However, this is still a full percentage point higher than two to three years ago. With the greatest proportion of socially deprived customers of any of the big UK water companies, the Warrington group admitted that “cash collection continues to be challenging”.
The work of its debt collectors is being supplemented by a £5 million investment in a charitable trust to help to bail out domestic customers who simply cannot pay. The shares closed 4.5 per cent lower at 538.5p.
Source: The Times

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