United Utilities Group PLC · LSE:UU.
United Utilities — Investor Presentation (March 2013)
12 slides from United Utilities's investor presentation, Mar 15, 2013
Slide 1: Retail household average cost to serve
United Utilities Group PLC Retail household average cost to serve 15 March 2013
Slide 2: Average cost to serve: Introduction
Average cost to serve Introduction • Several analysts have highlighted the fact that the proposed PR14 “average cost to serve” method of setting domestic retail cost allowances could disadvantage UU • UU has raised the issue with Ofwat, believing that the proposed methodology warrants examination an
Slide 3: Average cost to serve: Current status
Average cost to serve Current status Reporting inconsistencies Targeted review under way – E&Y appointed by Ofwat to look at consistency (not compliance) UUW supports the need to ensure data underpinning the price control is fit for purpose Denominator Methodology consultation proposes a ‘unique cus
Slide 4: Denominator
Denominator 0, United Utilities
Slide 5: Total cost assessment skewed by unique customer denominator
Denominator Total cost assessment skewed by unique customer denominator Source: Company regulatory accounts 2012 and JR11 property/customer data. Billed customer counts calculated as in Moody’s special comment report (27 Feb 2013) 4 Source: Company regulatory accounts 2012, Company June Returns 2011
Slide 6: Bad debt assessment skewed by unique customer denominator
Denominator Bad debt assessment skewed by unique customer denominator 5 Source: Company regulatory accounts 2012 and JR11 property/customer data. Billed customer counts calculated as in Moody’s special comment report (27 Feb 2013)
Slide 7: Distorted distribution of cost allowances
Denominator Distorted distribution of cost allowances Actual retail costs Ofwat cost recovery UU cost recovery Wholesale service excl. bad debt per proposal (unique proposal (service provider service provided customer) With provided) capping Wastewater Wastewater Wastewater Wastewater Combined at ac
Slide 8: Deprivation
Deprivation 0, United Utilities
Slide 9: UU has highest levels of socio-economic deprivation
Deprivation UU has highest levels of socio-economic deprivation Level of deprivation 1% most 5% most 10% most 20% most Region deprived deprived deprived deprived North East 12% 10% 9% 8% North West 52% 35% 28% 22% Yorkshire and The Humber 17% 18% 17% 14% East Midlands 5% 5% 6% 7% West Midlands 9% 17
Slide 10: Strong correlation between socio-economic deprivation and retail costs
Deprivation Strong correlation between socio-economic deprivation and retail costs 9 Source: The English Indices of Deprivation 2010 and United Utilities data on costs impacted by deprivation (c80% of total retail costs)
Slide 11: Strong correlation between socio-economic deprivation and retail costs
Deprivation Strong correlation between socio-economic deprivation and retail costs Graphs show average number of activities per property, for Local Super Output Areas of increasing income 10 deprivation (percentage of properties that are income deprived)
Slide 12: Strong evidence to support adjustment
Deprivation Strong evidence to support adjustment • If a formulaic approach is adopted, then UU will be able to provide a rich data set to support this • If a company specific approach is adopted, we believe there is strong evidence to support an adjustment based on the criteria that the factor can
United Utilities Group — Investor Presentation (March 2013) on 6ix