United Utilities quits renewable energy

Click to follow
The Independent Online

United Utilities, the owner of the water and electricity networks in North-west England, is close to quitting the green energy business and is in advanced discussions with a number of potential buyers.

The company's renewable energy activities, which include some hydroelectric and landfill gas generating capacity and approval to build a 108-megawatt wind farm off the coast of South Wales, are thought to be worth about £80m.

UU said it had decided to exit the green energy market because its resources could be better invested elsewhere. It is in the process of acquiring National Grid Transco's local gas network in the North-west for £1.1bn in partnership with the Hong Kong-based group CKI. UU is paying £80m for a 15 per cent equity stake in the gas network and has also just won a contract worth £1bn to manage the assets over the next eight years.

The company will hear the outcome next week of regulatory price reviews into its water and electricity businesses. In advance of the decisions from Ofwat and Ofgem, the company's chief executive John Roberts would not be drawn on whether job losses would be necessary among the 4,500-strong workforce in its two regulated businesses.

Ofwat has provisionally recommended a 3.5 per cent increase in UU's water charges in real terms for each of the next five years while Ofgem's draft ruling proposed a 6 per cent increase in distribution charges next year followed by a freeze in real terms for the next four.

Pre-tax profits increased by 13 per cent to £188m for the six months to the end of September while the company's order book grew by £3bn to £7bn. The group's non-regulated businesses now account for 49 per cent of turnover.

Comments