1. The Water Industry In England & Wales Structure, issues & strategies January 1999

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5. Industry structure Comprises ten major water companies. Privatised in 1989. Some integration into multi-utilities. Industry turnover approximately £6 billion. Ratio of profit to revenue typically between 30% and 45%. Limited cross-boundary competition.

6. Company services Regulated business.… Water infrastructure & supply. Waste water infrastructure & treatment. Non-regulated business…. Contracting services. Consultancy services. Off-shore equity stakes. Facilities management

7. Regulation Monopoly business regulated by Office of Water Regulation (OFWAT) Key activity is regulating prices using RPI-X regime. Requires regulated businesses to be financially ring-fenced. Automatically refers mergers involving assets of more than £30 million to the MMC.

8. Key issues Regulatory pressure to reduce leakage to required levels. Levels of capital investment required to refurbish and replace infrastructure. Increasing community expectations on environmental and pollution issues. Wind fall tax on privatised utilities.

9. Strategies Operational focus on reducing water leakage and improving water purity. Some attempted growth by acquisition. Geographical penetration as multi- utility companies. No significant foreign ownership as in the electricity industry.

10. Windfall tax One-off tax levied on the “excess profits” of the privatised utilities by the Blair administration. Paid in two equal installments on 1 December 1997 and 1 December 1998. Cost to each of the companies was “significant” - Thames Water paid £231 million.

11. Customers - 1.64 million Turnover - £850 million. Profit - £274 million. Business includes Hartlepool Water plc and global operations.

12. Operates as United Utilities plc. Customers - 2.9 million Turnover - £867 million. Profit - £383 million. Mains & sewers - 70,000 km Ownership by United seen as long-term geographical penetration strategy.

13. Customers - 2.6 million.

14. Population base - 8 million. Turnover - £1,157 million. Profit - £327 million. Recent hostile bid for South West Water plc suggests strategy of growth by acquisition.

15. Turnover - £343 million. Profit - £132 million. Recently subject to hostile bids from Severn-Trent Water and Wessex Water.

16. Customers - 1.7 million Turnover - £316 million. Profit - £114 million. Acquired by ScottishPower plc. Ownership by ScottishPower seen as a long-term investment in a growth market.

17. Waste customers - 11.9 million Water customers - 7,000,000 Turnover - £1,389 million. Profit - £407 million.

18. Population base - 3 million. Turnover - £226 million. Profit - £90 million. Mains & sewers - 24,900 km Acquired by Hyder plc (along with South Wales Electricity plc). Ownership by Hyder seen as a long- term geographical penetration strategy.

19. Water customers - 1.1 million Waste customers - 2.5 million Turnover - £266 million. Pre-tax profit - £139 million. Recently made hostile bid for South West Water plc, suggesting strategy of growth by acquisition.

20. Customers - 4.6 million Turnover - £580 million. Profit - £173 million. Mains & sewers - 58,000 km

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22. Cool links Anglian Water North West Water Severn-Trent Water Northumbrian Water Southern Water South West Water Thames Water Welsh Water Wessex Water Yorkshire Water OFWAT