United Utilities Water looking at 15pc reduction in bills

United Utilities Water submitted its business plan to Ofwat covering the 2020-25 period on Monday, reporting that it was planning for a 10.5% reduction in real terms in average bills between 2020 and 2025.

The FTSE 100 water utility said its balanced outcome delivery incentive package with a range of outcomes was estimated at plus or minus 2% of return on regulated equity across AMP7, equivalent to around £410m.

It said it would see a reduction of over £1bn in expenditure compared with AMP5, describing the plan as a “bold strategy” of innovation with further advancements in Systems Thinking capability.

The company said it would also deliver a major water resilience scheme, with estimated construction costs of over £750m in AMP7 and AMP8, to be directly procured for customers in Manchester and the Pennines.

United Utilities said it would adopt an RPI-stripped appointee cost of capital of 2.4%, consistent with Ofwat's early view, adding that it aimed to “lead” the industry in operational, corporate and financial resilience.

“Our business plan sets out our ambition to build on our achievements in AMP6 and deliver a better quality, more reliable water and wastewater service for customers in the North West of England to 2025 and beyond,” said chief executive Steve Mogford.

“We are cutting bills such that they will be lower in real terms in 2025 than they were 15 years ago, whilst also delivering higher standards of service, increasing resilience, delivering innovation and investing for the long-term.

“We exit AMP6 as a high performing, responsible company and have submitted a plan for AMP7 that delivers for customers, aligned with the key PR19 themes.”

Mogford said the company’s plan represented the next step towards its vision to be “the best” UK water and wastewater company, and had benefited from “extensive engagement” with customers and other stakeholders in the region.

“We are excited about what it means for AMP7 and beyond and we are confident that this is a very high quality and ambitious plan, rich in content, with a compelling proposition of bill reductions and service improvements.”