Northumbrian eases customer fears over usage restrictions

Northumbrian Water, which supplies 2.6 million people in the North East and another 1.8 million through Essex & Suffolk Water, said it has adequate resources in storage to meet demand, but will use awareness campaigns to try to control demand during dry spells.

The group, which owns the huge Kielder reservoir in Northumberland, said its northern operation again missed its leakage target as the bitterly cold winter sparked a rash of burst pipes, though remedial action should ensure it hits the benchmark this year.

In the previous year, both the northern and southern parts of the business came in above regulator Ofwat’s leakage limits due to cold weather.

The regulator has the power to fine firms that fail to meet leakage targets up to 10 per cent of their turnover.

Revenues rose by 4.7 per cent to £738m in the year to March 31, reflecting a 5 per cent rise in prices at the start of a new five-year regime agreed with Ofwat, even though industrial demand has been hit by the impact of the recession.

Profits rose by 6.3 per cent to £181m and would have been higher but for the adverse impact of a rise in RPI inflation adding £17.4m to the cost of its index-linked borrowings.

Northumbrian, which is almost 27 per cent owned by the Canadian fund Ontario Teachers’ Pension Plan, saw net debt rise 2 per cent over the year to £2.3bn.

Chief executive Heidi Mottram said “We will continue to deliver value to our stakeholders by focusing on our core competencies of water and waste water management, underpinned by our five strategic themes of customer, competitiveness, people, environment and communities. I am pleased with the progress we have made this year towards achieving that goal.

“The group continues to produce strong financial and operational results and has funding in place to meet our requirements for the next three years. We expect to perform well against our regulatory and contractual targets over the next four years.”

The dividend for the year rose by 7.9 per cent to 14.29p.

Income from its water and waste water contracts was up 4.4 percent, Northumbrian added.

Last week, Severn Trent, United Utilities and Pennon also reported better than expected annual profits.