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Potable Water and Sewerage - UK - April 2015

“The estimated cost of implementing the Water Framework Directive (WFD) is around £30 billion over 43 years, of which around 40% will be accounted for by water companies’ direct infrastructure and management spending. The WFD will continue to be a key driver for capital investment in the water and sewerage industry, with companies also beginning to look at technologies that offer the best solution to implementing the directive.”

– Claudia Preedy, Industrial Analyst

This report will explore the following key questions facing the UK water and sewerage industry:

  • What are the key drivers for capital investment in the water and sewerage industry?
  • What have been the capital expenditure patterns by individual water and sewerage companies during the last five years?
  • Is there a shift from capital project investment towards asset maintenance?
  • How do the changes in the regulatory environment for the Asset Management Period 2015-20 (AMP6) affect the industry's approach to capital investment?
  • What are water and sewerage companies' spending proposals for AMP6?

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Table of contents

  1. Executive Summary

      • The market
        • Capital expenditure tends to be cyclical and determined by the five-year spending periods
          • Few major capital projects undertaken during AMP5 (2010-15)
            • Figure 1: UK capital expenditure on water and sewerage services, 2009/10-2013/14
          • Non-infrastructure maintenance spending dominates sewerage capital expenditure
            • Non-infrastructure maintenance spending accounts for nearly 40% of water-related capital expenditure in 2013/14
              • Figure 2: Analysis of sewerage capital expenditure in England and Wales by water and sewerage companies, by type, 2013/14
              • Figure 3: Analysis of water capital expenditure in England and Wales by water and sewerage companies, by type, 2013/14
            • Move towards total expenditure in AMP6 2015-20 to reduce bias towards capital programmes
              • Shift in industry focus towards asset management and maintenance
                • Total capital expenditure projected to reach £23.4 billion during AMP6
                  • £4.2 billion Thames Tideway Tunnel to represent largest capital project over next decade
                    • Figure 4: Capital expenditure in the water and sewerage industry during AMP6 in England & Wales, 2015/16-2019/20
                  • Market factors
                    • Water Framework Directive (WFD)
                      • Urban Waste Water Treatment Directive (UWWTD)
                        • Figure 5: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales, 1990-2015
                      • Water retail market to open up to all business customers in England & Wales in 2017
                        • Companies
                          • What we think
                          • Key Insights

                              • What are the implications of the Water Framework Directive for the UK water & sewerage industry?
                                • What does the shift towards total expenditure (Totex) and long-term outcomes in AMP6 mean for the industry?
                                  • Are companies forming more long-term relationships with their supply chain and delivery partners?
                                  • Introduction

                                      • Definitions
                                        • Methodology
                                          • Abbreviations
                                            • Market positioning
                                            • UK Economy

                                              • Overview
                                                • Inflation
                                                  • Interest rates
                                                    • Consumer spending
                                                      • Business investment
                                                      • Market Factors

                                                        • Key points
                                                          • Industry regulation
                                                            • Legislative environment
                                                              • European Water Framework Directive (WFD)
                                                                • Urban Waste Water Treatment Directive (UWWTD)
                                                                    • Figure 6: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales, 1990-15
                                                                    • Figure 7: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales graph, 1990-15
                                                                  • The Drinking Water Directive
                                                                    • Revised Bathing Water Directive
                                                                        • Figure 8: UK coastal bathing water compliance with Bathing Water Directive for mandatory coliform standards, as of 2014
                                                                      • Transfer of private sewers in England and Wales
                                                                        • Figure 9: Capital expenditure on private sewers in England & Wales, by water and sewerage company, 2012-15
                                                                      • The Flood and Water Management Act 2010
                                                                        • Water Act 2014 to open up water and sewerage retail competition for all business customers in 2017
                                                                        • Industry Structure

                                                                          • Key points
                                                                            • England & Wales
                                                                                • Figure 10: Details of water and sewerage companies, as of March 2015
                                                                                • Figure 11: Details of water-only companies, as of March 2015
                                                                              • Sewerage services
                                                                                • Figure 12: Details of companies that supply sewerage services to water-only companies, as of March 2015
                                                                                • Figure 13: Sewerage customers of water and sewerage companies, household and non-household, 2012/13 and 2013/14
                                                                                • Figure 14: Sewerage customers of water and sewerage companies, household and non-household graph, 2013/14
                                                                              • Sewage treatment processes
                                                                                • Water services
                                                                                  • Figure 15: Turnover from water services in England and Wales, by type, 2009/10-2013/14
                                                                                • Regulators
                                                                                  • Performance
                                                                                      • Figure 16: Internal sewer flooding indicators in England and Wales, by company, 2011/12-2013/14
                                                                                      • Figure 17: Ofwat final determinations for sewer flooding expenditure, by water and sewerage company, 2010-15
                                                                                      • Figure 18: Expenditure to reduce flooding risk for properties in England & Wales, by water and sewerage company, 2010/11-2014/15
                                                                                    • Scotland
                                                                                      • Northern Ireland
                                                                                      • Capital Expenditure

                                                                                        • Key points
                                                                                          • Total capital expenditure
                                                                                            • Figure 19: Total capital expenditure by water and sewerage companies in England & Wales, 2005-10 and 2010-15
                                                                                            • Figure 20: Total capital expenditure by water-only companies in England & Wales, 2005-10 and 2010-15
                                                                                            • Figure 21: Actual UK capital expenditure on water and sewerage services, 2009/10-2014/15
                                                                                            • Figure 22: UK capital expenditure on water and sewerage services, 2009/10-2013/14
                                                                                            • Figure 23: UK capital expenditure on water and sewerage services graph, 2009/10-2013/14
                                                                                          • Sewerage-related capital expenditure
                                                                                            • Figure 24: Analysis of sewerage-related capital expenditure in England and Wales, by company, 2008/09-2013/14
                                                                                            • Figure 25: Analysis of sewerage-related capital expenditure, by water and sewerage companies in England and Wales, 2008/09-2013/14
                                                                                            • Figure 26: Analysis of sewerage capital expenditure in England and Wales by water and sewerage companies, by type, 2011/12-2013/14
                                                                                            • Figure 27: Sewers renovated and replaced in England and Wales, by company, 2009/10-2013/14
                                                                                          • Water-related capital expenditure
                                                                                            • Figure 28: Analysis of water related capital expenditure, by water and sewerage companies in England and Wales, 2008/09-2013/14
                                                                                            • Figure 29: Analysis of water related capital expenditure, by water and sewerage companies in England and Wales graph, 2008/09-2013/14
                                                                                            • Figure 30: Analysis of water capital expenditure in England & Wales, by water and sewerage companies, by purpose, 2013/14
                                                                                            • Figure 31: Analysis of water capital expenditure by water-only companies in England & Wales, by type, 2013/14
                                                                                            • Figure 32: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2011/12-2013/14
                                                                                            • Figure 33: Analysis of water capital expenditure in England and Wales graph, by water and sewerage companies, by type, 2013/14
                                                                                            • Figure 34: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2013/14
                                                                                            • Figure 35: Analysis of water capital expenditure in England and Wales graph, by water-only companies, by type, 2013/14
                                                                                          • Scottish Water capital expenditure
                                                                                            • Figure 36: Analysis of Scottish Water capital expenditure on water and sewerage service, 2009/10-2013/14
                                                                                            • Figure 37: Analysis of Scottish Water capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                            • Figure 38: Progress of Scottish Water to date in the Five Year Investment Programme 2010/15
                                                                                          • Northern Ireland capital expenditure
                                                                                            • Figure 39: Analysis of Northern Ireland Water capital expenditure on water and sewerage services, 2009/10-2013/14
                                                                                        • Company Analysis

                                                                                          • Key points
                                                                                          • Anglian Water Services

                                                                                              • Anglian Water’s reduces the number of framework agreements for AMP6
                                                                                                  • Figure 40: Financial analysis of Anglian Water Services, 2010-14
                                                                                                  • Figure 41: Number of properties billed by Anglian Water, 2012/13-2013/14
                                                                                                  • Figure 42: Anglian Water, infrastructure details, 2009/10-2013/14
                                                                                                  • Figure 43: Total capital expenditure of Anglian Water, 2009/10-2013/14
                                                                                                  • Figure 44: Analysis of sewerage capital expenditure by Anglian Water Services, by type, 2012/13-2013/14
                                                                                                  • Figure 45: Analysis of water capital expenditure by Anglian Water, by type, 2012/13-2013/14
                                                                                              • United Utilities Water

                                                                                                  • Five delivery partners selected for £3.4 billion AMP6 programme
                                                                                                      • Figure 46: Financial analysis of United Utilities Water, 2010-14
                                                                                                      • Figure 47: Number of properties billed by United Utilities, 2012/13-2013/14
                                                                                                      • Figure 48: United Utilities, infrastructure details, 2009/10-2013/14
                                                                                                      • Figure 49: Total capital expenditure of United Utilities, 2009/10-2013/14
                                                                                                      • Figure 50: Analysis of sewerage capital expenditure by United Utilities, by type, 2012/13-2013/14
                                                                                                      • Figure 51: Analysis of water capital expenditure by United Utilities, by type, 2012/13-2013/14
                                                                                                  • Northumbrian Water

                                                                                                        • Figure 52: Financial analysis of Northumbrian Water, 2009-13
                                                                                                        • Figure 53: Number of properties billed by Northumbrian Water, 2012/13-2013/14
                                                                                                        • Figure 54: Northumbrian Water, infrastructure details, 2008/09-2012/13
                                                                                                        • Figure 55: Total capital expenditure of Northumbrian Water, 2008/09-2012/13
                                                                                                        • Figure 56: Analysis of sewerage capital expenditure by Northumbrian Water, by type, 2012/13-2013/14
                                                                                                        • Figure 57: Analysis of water capital expenditure by Northumbrian Water, by type, 2011/12-2012/13
                                                                                                    • Severn Trent Water

                                                                                                        • Severn Trent reappoints seven contractors for AMP6
                                                                                                            • Figure 58: Financial analysis of Severn Trent Water, 2010-14
                                                                                                            • Figure 59: Number of properties billed by Severn Trent Water, 2011/12-2012/13
                                                                                                            • Figure 60: Severn Trent Water, Infrastructure Details, 2009/10-2013/14
                                                                                                            • Figure 61: Total capital expenditure of Severn Trent Water, 2009/10-13/14
                                                                                                            • Figure 62: Analysis of sewerage capital expenditure by Severn Trent Water, by type, 2012/13-2013/14
                                                                                                            • Figure 63: Analysis of water capital expenditure by Severn Trent Water, by type, 2012/13-2013/14
                                                                                                        • South West Water

                                                                                                            • South West Water accelerates AMP6 work
                                                                                                              • Figure 64: Financial analysis of South West Water, 2010-14
                                                                                                              • Figure 65: Number of properties billed by South West Water, 2012/13-2013/14
                                                                                                              • Figure 66: South West Water, infrastructure details, 2009/10-2013/14
                                                                                                              • Figure 67: Total capital expenditure of South West Water, 2009/10-2013/14
                                                                                                              • Figure 68: Analysis of sewerage capital expenditure by South West Water, by type, 2012/13-2013/14
                                                                                                              • Figure 69: Analysis of water capital expenditure by South West Water, by type, 2012/13-2013/14
                                                                                                          • Southern Water Services

                                                                                                              • Southern Water brings project design back in-house for AMP6
                                                                                                                • Figure 70: Financial analysis of Southern Water Services, 2010-14
                                                                                                                • Figure 71: Number of properties billed by Southern Water, 2012/13-2013/14
                                                                                                                • Figure 72: Southern Water, infrastructure details, 2009/10-2013/14
                                                                                                                • Figure 73: Total capital expenditure of Southern Water Services, 2009/10-2013/14
                                                                                                                • Figure 74: Analysis of sewerage capital expenditure by Southern Water Services, by type, 2012/13-2013/14
                                                                                                                • Figure 75: Analysis of water capital expenditure by Southern Water Services, by type, 2012/13-2013/14
                                                                                                            • Thames Water Utilities

                                                                                                                  • Figure 76: Financial analysis of Thames Water Utilities, 2010-14
                                                                                                                  • Figure 77: Number of properties billed by Thames Water Utilities, 2012/13-2013/14
                                                                                                                  • Figure 78: Thames Water Utilities, infrastructure details, 2009/10-2013/14
                                                                                                                  • Figure 79: Total capital expenditure of Thames Water Utilities, 2009/10-2013/14
                                                                                                                  • Figure 80: Analysis of sewerage capital expenditure by Thames Water Utilities, by type, 2012/13-2013/14
                                                                                                                  • Figure 81: Analysis of water capital expenditure by Thames Water Utilities, by type, 2012/13-2013/14
                                                                                                              • Dŵr Cymru Cyfyngedig

                                                                                                                    • Figure 82: Financial analysis of Dŵr Cymru Cyfyngedig, 2010-14
                                                                                                                    • Figure 83: Number of properties billed by Dŵr Cymru Cyfyngedig, 2011/12-2012/13
                                                                                                                    • Figure 84: Dŵr Cymru Cyfyngedig, infrastructure details, 2009/10-2013/14
                                                                                                                    • Figure 85: Total capital expenditure of Dŵr Cymru Cyfyngedig, 2009/10-2013/14
                                                                                                                    • Figure 86: Analysis of sewerage capital expenditure by Dŵr Cymru Cyfyngedig, by type, 2012/13-2013/14
                                                                                                                    • Figure 87: Analysis of water capital expenditure by Dŵr Cymru Cyfyngedig, by type, 2012/13-2013/14
                                                                                                                • Wessex Water

                                                                                                                    • Figure 88: Financial analysis of Wessex Water, 2010-14
                                                                                                                    • Figure 89: Number of properties billed by Wessex Water, 2012/13-2013/14
                                                                                                                    • Figure 90: Wessex Water, infrastructure details, 2009/10-2013/14
                                                                                                                    • Figure 91: Total capital expenditure of Wessex Water, 2009/10-2013/14
                                                                                                                    • Figure 92: Analysis of sewerage capital expenditure by Wessex Water, by type, 2012/13-2013/14
                                                                                                                    • Figure 93: Analysis of water capital expenditure by Wessex Water, by type, 2012/13-2013/14
                                                                                                                • Yorkshire Water Services

                                                                                                                      • Figure 94: Financial analysis of Yorkshire Water Services, 2010-14
                                                                                                                      • Figure 95: Number of properties billed by Yorkshire Water, 2012/13-2013/14
                                                                                                                      • Figure 96: Yorkshire Water, infrastructure details, 2009/10-2013/14
                                                                                                                      • Figure 97: Total capital expenditure of Yorkshire Water Services, 2009/10-2013/14
                                                                                                                      • Figure 98: Analysis of sewerage capital expenditure by Yorkshire Water Services, by type, 2012/13-2013/14
                                                                                                                      • Figure 99: Analysis of water capital expenditure by Yorkshire Water Services, by type, 2012/13-2013/14
                                                                                                                  • Statutory Water Companies

                                                                                                                      • Figure 100: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2013/14
                                                                                                                  • Scottish Water

                                                                                                                        • Figure 101: Financial analysis of Scottish Water, 2010-14
                                                                                                                    • Northern Ireland Water

                                                                                                                          • Figure 102: Financial analysis of Northern Ireland Water, 2010-14
                                                                                                                      • Market Forecast

                                                                                                                        • Key points
                                                                                                                          • 25-year strategic direction statements
                                                                                                                              • Figure 103: UK population, by region, 2013-25
                                                                                                                            • Forecast capital expenditure
                                                                                                                              • England & Wales – AMP6 2015-20
                                                                                                                                • Figure 104: Average expected combined household bill, by water and sewerage companies, 2014/15 and 2019/20
                                                                                                                                • Figure 105: Average expected household water bill, by water-only companies, 2014/15 and 2019/20
                                                                                                                              • AMP6 Expenditure Allowances
                                                                                                                                • Move towards long-term alliances and frameworks across industry
                                                                                                                                  • Figure 106: Total expenditure (Totex) allowance for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
                                                                                                                                  • Figure 107: Total expenditure (Totex) allowance for AMP6 in England & Wales graph, by water & sewerage company, 2015/16-2019/20
                                                                                                                                  • Figure 108: Forecast capital expenditure for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
                                                                                                                                  • Figure 109: Forecast capital expenditure for AMP6 in England & Wales graph, by water & sewerage company, 2015/16-2019/20
                                                                                                                                  • Figure 110: Forecast capital expenditure for AMP6 in England & Wales graph, by water only company, 2015/16-2019/20
                                                                                                                                • Thames Tideway Tunnel
                                                                                                                                    • Figure 111: Estimated cost of Thames Tideway Tunnel, 2014/15-2021/22+
                                                                                                                                  • Scotland Investment Programme 2015-2021
                                                                                                                                    • Figure 112: Forecast capital expenditure for Scottish Water, 2015/16-2020/21
                                                                                                                                  • Northern Ireland Investment Programme 2015/16-2020/21
                                                                                                                                  • Further Sources and Contacts

                                                                                                                                    • Trade associations and regulatory bodies
                                                                                                                                      • Trade magazines
                                                                                                                                        • Trade exhibitions

                                                                                                                                        Companies Covered

                                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                                        Potable Water and Sewerage - UK - April 2015

                                                                                                                                        US $1,288.43 (Excl.Tax)