Business
Final Business Plan
Final Business Plan.
About this update from United Utilities Group Plc
[{"type":"text","content":"\n \nUnited Utilities Group PLC\n\n7 April 2009\n\n UNITED UTILITIES WATER PLC FINAL BUSINESS PLAN 2010-15 \n\nUnited Utilities Water PLC (UUW) has submitted its final water and wastewater\nbusiness plan covering the 2010-15 period to Ofwat, as part of the 2009 water\nprice review process.\n\nCapital investment\n\nThe proposed 2010-15 capital investment programme aims to meet existing\nstandards of service, address higher quality standards and make provision for\nthe challenge of climate change, whilst maintaining the affordability of\ncustomer bills.\n\nThe total proposed capital investment programme contained within the plan,\nincluding infrastructure renewals expenditure, is approximately £3.7 billion\n(2007/08 prices), comprising approximately £1.3 billion for the water service\nand approximately £2.4 billion for the wastewater service.\n\nOf the proposed £3.7 billion capital programme, investment to meet tighter\nregulatory quality standards, enhance service to customers and maintain the\nsupply/demand balance is forecast at around £1.8 billion. The remainder of the\ninvestment relates to maintenance of the company's substantial water and\nwastewater assets and infrastructure.\n\nEfficiency\n\nUUW expects to improve its efficiency across the 2010-15 period. The company is\naiming for an annual improvement of 1.5% in its underlying operating\nefficiency, although operating expenditure is likely to increase overall due to\ncost pressures in areas such as property rates. UUW is also targeting an\nimprovement in efficiency of between 4% and 8%, across the five-year period, in\nrespect of its capital investment programme.\n\nReturn on capital\n\nUUW estimates that to finance this plan an average real, fully post-tax return\nof 4.85% is required, which it believes would support an A3 credit rating. This\ncompares with a cost of capital of 5.1% assumed by Ofwat at the last price\nreview in 2004, reflecting the reduction in the cost of debt finance available\nto the water sector during the early part of the 2005-10 period. However, this\nreturn represents an increase of approximately 0.2% compared with the required\nreturn in the draft business plan, following the company's reassessment of its\nfinancing costs in light of recent financial market conditions.\n\nThis reassessment is supported by NERA's recently updated independe...