Northumbrian Water has reported continued strong operational and financial performance for 2013-14 with improvements to service in a number of areas with the publication of its Regulatory Accounts and Annual Performance Review for the year ended 31 March 2014.
Capital investment in the regulated business, net of grants and contributions, for the year was £212.5m (2013: £220.1m), with profit on ordinary activities before taxation for the year ended 31 March 2014 was £212.3m (2013: £212.7m). Profit for the financial year was £226.3m (2013: £150.0m).
Operating costs, including capital maintenance costs, for the year ended 31 March 2014 were £446.5m (2013: £427.6m). Northumbrian Water said the rise reflected increases in manpower costs, power prices, contractor costs and depreciation plus some restructuring costs and general inflationary increases, which were partially offset by the benefits of NWL’s efficiency programme. During the year, the Company invested £1.0m (2013: £1.2m) in research and development. Turnover was £776.4m for the year ended 31 March 2014 (2013: £755.0m).
In April 2013, the utility drew the third £50m tranche of a £150m facility from the European Investment Bank (EIB) at a fixed rate of 2.896% and subsequently signed a further £100m facility with the EIB, the first £50m tranche of which was drawn in January 2014. The remaining £50m was drawn after the balance sheet date in April 2014.
Chief Executive Officer, Heidi Mottram, commented:
“I am delighted to report improved performance in a number of key areas. This includes our best-ever customer satisfaction scores, a continuation of our industry-leading performance for interruptions to supply and sewage treatment, a reduction in sewer flooding incidents and our best-ever microbiological performance at our service reservoirs. We continue to be recognised as industry leaders in leakage control and water efficiency and the completion of the major project to expand Abberton Reservoir has secured supplies to Essex for the next 25 years.”
The Performance review also highlights the area where performance is judged as needing to improve, including drinking water quality in Essex and Suffolk which is rated as unsatisfactory despite a high level of compliance. NWL said that the results show an improvement on last year but remain slightly lower than the industry average.
In Essex, the main reason for the small percentage of failures was pesticides from agriculture - NWL has formal agreements with the Drinking Water Inspectorate regarding eleven water treatment works relating to the pesticides metaldehyde or clopyralid. The presence of the pesticides (which cannot be treated to levels that would pass quality standards) at the points where raw water is abstracted is linked to farming and other land management activities which result in pollution of rivers and streams.
Farmers in Essex in 2012-2013 significantly increased their use of metaldehyde to treat slugs due to the wet conditions. This, together with the high volume of rain water flowing off already saturated land, resulted in widespread pollution causing a high concentration of metaldehyde in some of the company’s water sources. NWL is working on catchment management with farmers and other land managers to reduce or stop pesticides entering the rivers supplying its treatment works. The firm has also developed a new faster method for detection of metaldehyde in raw water.
The number of treatment works with microbiological failures in the final (treated) water remained stable in 2013. Inspection and maintenance regimes on NWL’s treated water tanks, process units and sample points has been sustained at an enhanced level to manage the risk of failure and, where appropriate, treatment was enhanced to increase the effectiveness of disinfection. This included the installation of ultraviolet (UV) disinfection at three groundwater sites to support the existing chlorination disinfection arrangements.
On flood risk management, the Performance Report says that following the successful completion of the Tyneside Sustainable Sewerage Study, NWL has engaged with the Environment Agency (EA) and the 13 Local Authorities covering the North East to share the principles of a proactive approach to integrated drainage area planning to reduce the risk of flooding.
The approach has developed a way of prioritising risk which can be used to identify a candidate list for the delivery of jointly funded drainage studies, presenting an opportunity for an ongoing programme of activity targeting those areas of highest risk of flooding with up to 13 areas identified for progression in 2014.
In 2013, NWL installed the world’s first natural reed bed system for treating sludge from the drinking water treatment process to recycle water at Hanningfield Reservoir in Essex .
On energy, NWL’s two advanced anaerobic digestion plants, which convert all of its sewage sludge to renewable energy, have been fully commissioned and optimised - supporting a reduction in greenhouse gas emissions for the sixth successive year.
Heidi Mottram continued:
“This has been a successful year across many aspects of our business. The focus on our vision, values and business plan will continue in the coming year and we are confident of further success and achieving our vision of becoming the national leader in the provision of sustainable water and waste water services.”
“With funding and liquidity in place to meet our operational and capital investment requirements for at least the next two years, we are well positioned to maintain a strong financial performance.”