Outlook: Thames flows west in search of regulatory relief
Tuesday 23 November 1999
In his eagerness to make a bigger splash in the world's biggest water market, Thames' Bill Alexander has not stinted. Whereas Yorkshire Water got away with paying ten times operating profits when it went divining for a US water business, Thames is paying 14 times. Moreover, Yorkshire's acquisition of the Connecticut-based Aquarion brought with it an army of high-spending, bulge bracket households in Rhode Island. Thames, by contrast, has bought itself a mixed bunch of domestic, commercial and industrial consumers in a state which, as viewers of the television series based around a small time mafia family will recall, boasts some less than salubrious neighbourhoods.
That said, nobody can quarrel with the margin, which even a protection racket would find hard to beat. Operating profits last year were $52m on turnover of $145m, and another rate increase will be in the pipeline as soon as the deal is done. Those are the kind of figures that ought to provide food for thought for the financial illiterates who produced yesterday's trade union report comparing water profits here and in Europe.
E'town is earning a nice fat 11.25 per cent return on capital and can go along to its regulator any time it thinks it has a case to squeeze even more out of its customers.
That will not last forever, of course. Incentive-based regulation is slowly beginning to seep into the American scene, which means that companies like E'town will have to start working harder for their profits and taking a much closer look at their bloated cost bases.
Even so, the returns on offer are the kind of figures which make the eyes water among UK utility bosses like Mr Alexander. Along with the rest of the industry he will discover on Thursday just how bad the soaking will be from Ian Byatt at Ofwat. Faced with sinking under an ever more punitive price regime at home, it is hardly surprising that Thames should be fleeing to a place where the regulators, if not the locals, take a more benign view of what enterprise should be allowed to earn.
- 1 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 Top Gear: Jodie Kidd, Philip Glenister and Guy Martin 'in advanced talks' to join show
- 4 Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
- 5 How to gain confidence and maximise your sexual potential
Boston Marathon runner's search for mystery man she kissed ends with letter from his wife
Frankie Boyle on Scottish independence: 'In the Interests of Unity, F**k Off'
Italian police 'reveal' what Jesus looked like as a young boy
Mysterious 'X-Files' sounds heard miles above the Earth
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian combined with near-naked ensemble
In defence of liberal democracy
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
Andy McSmith's Sketch: Feisty audience is the real star of an enlightening show
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...