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Potable Water and Sewerage - UK - April 2016

“The WFD will continue to be a key driver for capital investment in the water and sewerage industry. It is also expected to drive innovation as companies are looking at new technologies that offer the best solution to implementing the directive. However increased waste water treatment under the WFD will also see carbon emissions rise. To mitigate the carbon impact of the WFD, the industry is expected to increasingly adopt sustainable drainage systems (SuDS) to reduce the storm water treated at sewage works. Self-generation of renewable energy is also set to increase across the water and sewerage industry as companies look to reduce their carbon footprint.”
– Claudia Preedy - B2B 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 growth slowed in 2014/15 as focus shifted towards preparing for work for the next five-year spending cycle AMP6 (2015-20)
          • Capital spending during AMP5 (2010-15) focussed on networks and capital maintenance
            • Figure 1: UK capital expenditure on water and sewerage services, 2010/11-2014/15
          • Non-infrastructure maintenance spending dominates sewerage capital expenditure
            • Water-related capital expenditure up 4% in 2014/15
              • Figure 2: Analysis of sewerage capital expenditure in England and Wales by water and sewerage companies, by type, 2014/15
              • Figure 3: Analysis of water capital expenditure in England and Wales by water and sewerage companies, by type, 2014/15
            • Move towards total expenditure in AMP6 2015-20 should reduce bias towards capital programmes
              • Shift in industry focus towards asset management and maintenance
                • £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
                  • Environmental legislation
                    • Climate change
                      • Population and household growth
                        • Affordability
                          • Technological change
                            • Water retail market to open up to all business customers in 2017
                              • Companies
                                • What we think
                                • Key Insights

                                    • What are the implications of the Water Framework Directive for the UK water & sewerage industry?
                                      • Have there been any developments in the industry in preparation for the opening of the non-domestic retail market in 2017?
                                        • What does the shift towards total expenditure (Totex) and long-term outcomes in AMP6 mean for the industry?
                                        • Introduction

                                            • Definitions
                                              • Methodology
                                                • Abbreviations
                                                  • Market Positioning
                                                  • UK Economy

                                                    • Overview
                                                      • Figure 5: UK GDP quarterly development, 2003-15
                                                      • Figure 6: UK GDP in economic downturns and recoveries since 1979
                                                    • Inflation
                                                      • Interest rates
                                                        • Consumer spending
                                                          • Business investment
                                                            • Figure 7: UK GFCF 2003-15
                                                        • Market Factors

                                                          • Key Points
                                                            • Industry regulation
                                                              • Legislative environment
                                                                  • Figure 8: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales, 1990-15
                                                                  • Figure 9: Sewerage treatment enhancement expenditure driven by UWWTD in England & Wales, 1990-2015
                                                                  • Figure 10: UK coastal bathing water compliance with the 2006 Bathing Water Directive for 2015
                                                                  • Figure 11: Capital expenditure on private sewers in England & Wales, by water and sewerage company, 2012-15
                                                              • Industry Structure

                                                                • Key Points
                                                                  • England & Wales
                                                                      • Figure 12: Details of water and sewerage companies, as of March 2016
                                                                      • Figure 13: Details of water-only companies, as of March 2016
                                                                    • Sewerage Services
                                                                      • Figure 14: Details of companies that supply sewerage services to water-only companies, as of March 2016
                                                                      • Figure 15: Sewerage customers of water and sewerage companies, household and non-household, 2013/14 and 2014/15
                                                                      • Figure 16: Sewerage customers of water and sewerage companies, household and non-household, 2014/15
                                                                    • Sewage Treatment Processes
                                                                      • Water Services
                                                                        • Figure 17: Turnover from water services in England and Wales, by type, 2010/11-2014/15
                                                                      • Regulators
                                                                        • Performance
                                                                            • Figure 18: Internal sewer flooding indicators in England and Wales, by company, 2011/12-2014/15
                                                                            • Figure 19: Ofwat final determinations for sewer flooding expenditure, by water and sewerage company, 2010-2015
                                                                            • Figure 20: 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 21: Total capital expenditure by water and sewerage companies in England & Wales, 2005-10 and 2010-15
                                                                                  • Figure 22: Total capital expenditure by water-only companies in England & Wales, 2005-2010 and 2010-2015
                                                                                • Contracts for AMP5 tendered early to reduce boom and bust cycle
                                                                                  • Figure 23: Actual UK capital expenditure on water and sewerage services, 2009/10-2014/15
                                                                                  • Figure 24: UK capital expenditure on water and sewerage services, 2010/11-2014/15
                                                                                  • Figure 25: UK Capital Expenditure on Water and Sewerage Services, 2010/11-2014/15
                                                                                • Sewerage-Related Capital Expenditure
                                                                                  • Figure 26: Analysis of sewerage-related capital expenditure in England and Wales, by company, 2010/11-2014/15
                                                                                  • Figure 27: Analysis of sewerage-related capital expenditure, by water and sewerage companies in England and Wales, 2010/11-2014/15
                                                                                  • Figure 28: Analysis of sewerage capital expenditure in England and Wales by water and sewerage companies, by type, 2011/12-2014/15
                                                                                • Water-Related Capital Expenditure
                                                                                  • Figure 29: Analysis of water related capital expenditure, by water and sewerage companies in England and Wales, 2010/11-2014/15
                                                                                  • Figure 30: Analysis of water-related capital expenditure, by water and sewerage companies in England and Wales, 2010/11-2014/15
                                                                                  • Figure 31: Analysis of water capital expenditure in England & Wales, by water and sewerage companies, by purpose, 2014/15
                                                                                  • Figure 32: Analysis of water capital expenditure by water-only companies in England & Wales, by type, 2014/15
                                                                                  • Figure 33: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2011/12-2014/15
                                                                                  • Figure 34: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2014/15
                                                                                  • Figure 35: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2014/15
                                                                                  • Figure 36: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2014/15
                                                                                • Scottish Water Capital Expenditure
                                                                                  • Figure 37: Analysis of Scottish Water capital expenditure on water and sewerage services, 2010/11-2014/15
                                                                                  • Figure 38: Analysis of Scottish Water capital expenditure on water and sewerage services, 2010/11-2014/15
                                                                                  • Figure 39: Progress of Scottish Water to Date in the Five Year Investment Programme 2010/15
                                                                                • Northern Ireland Capital Expenditure
                                                                                  • Figure 40: Analysis of Northern Ireland Water capital expenditure on water and sewerage services, 2010/11-2014/15
                                                                              • Company Analysis

                                                                                • Key Points
                                                                                • Anglian Water Services

                                                                                    • Anglian Water reduces the number of framework agreements for AMP6
                                                                                        • Figure 41: Financial Analysis of Anglian Water Services, 2011-15
                                                                                        • Figure 42: Number of properties billed by Anglian Water, 2013/14-2014/15
                                                                                        • Figure 43: Anglian Water, infrastructure details, 2010/11-2014/15
                                                                                        • Figure 44: Total capital expenditure of Anglian Water, 2010/112014/15
                                                                                        • Figure 45: Analysis of sewerage capital expenditure by Anglian Water Services, by type, 2013/14-2014/15
                                                                                        • Figure 46: Analysis of water capital expenditure by Anglian Water, by type, 2013/14-2014/15
                                                                                    • Dwr Cymru Cyfyngedig

                                                                                        • Dwr Cymru Welsh Water selects three delivery partners for new Capital Delivery Alliance
                                                                                            • Figure 47: Financial Analysis of D(r Cymru Cyfyngedig, 2010-15
                                                                                            • Figure 48: Number of properties billed by D(r Cymru Cyfyngedig, 2013/14-2014/15
                                                                                            • Figure 49: D(r Cymru Cyfyngedig, infrastructure details, 2009/10-2013/14
                                                                                            • Figure 50: Total capital expenditure of D(r Cymru Cyfyngedig, 2010/112014/15
                                                                                            • Figure 51: Analysis of sewerage capital expenditure by D(r Cymru Cyfyngedig, by type, 2013/14-2014/15
                                                                                            • Figure 52: Analysis of water capital expenditure by Dwr Cymru Cyfyngedig, by Type, 2013/14-2014/15
                                                                                        • Northumbrian Water

                                                                                            • Northumbrian Water awards AMP6 framework partnership contracts
                                                                                              • Figure 53: Financial Analysis of Northumbrian Water, 2011-15
                                                                                              • Figure 54: Number of properties billed by Northumbrian Water, 2013/14-2014/15
                                                                                              • Figure 55: Northumbrian Water, infrastructure details, 2010/11-2014/15
                                                                                              • Figure 56: Total capital expenditure of Northumbrian Water, 2008/09-2012/13
                                                                                              • Figure 57: Analysis of sewerage capital expenditure by Northumbrian Water, by type, 2012/13-2013/14
                                                                                              • Figure 58: Analysis of water capital expenditure by Northumbrian Water, by type, 2011/12-2012/13
                                                                                          • Scottish Water

                                                                                                • Figure 59: Financial analysis of Scottish Water, 2011-15
                                                                                            • Severn Trent Water

                                                                                                • Severn Trent reappoints seven contractors for AMP6
                                                                                                    • Figure 60: Financial Analysis of Severn Trent Water, 2011-15
                                                                                                    • Figure 61: Number of properties billed by Severn Trent Water, 2013/14-2014/15
                                                                                                    • Figure 62: Severn Trent Water, Infrastructure Details, 2010/11-2014/15
                                                                                                    • Figure 63: Total capital expenditure of Severn Trent Water, 2010/11-14/15
                                                                                                    • Figure 64: Analysis of sewerage capital expenditure by Severn Trent Water, by type, 2013/14-2014/15
                                                                                                    • Figure 65: Analysis of water capital expenditure by Severn Trent Water, by type, 2013/14-2014/15
                                                                                                • South West Water

                                                                                                    • South West Water accelerates AMP6 work after early receipt of draft determinations in 2014
                                                                                                      • Pennon acquires Bournemouth Water in 2015
                                                                                                        • Figure 66: Financial Analysis of South West Water, 2010-15
                                                                                                        • Figure 67: Number of properties billed by South West Water, 2013/14-2014/15
                                                                                                        • Figure 68: South West Water, infrastructure details, 2010/11-2014/15
                                                                                                        • Figure 69: Total capital expenditure of South West Water, 2010/11-2014/15
                                                                                                        • Figure 70: Analysis of sewerage capital expenditure by South West Water, by type, 2013/14-2014/15
                                                                                                        • Figure 71: Analysis of water capital expenditure by South West Water, by type, 2013/14-2014/15
                                                                                                    • Southern Water Services

                                                                                                        • Southern Water brings project design back in-house for AMP6
                                                                                                          • Figure 72: Financial Analysis of Southern Water Services, 2010-15
                                                                                                          • Figure 73: Number of properties billed by Southern Water, 2013/14-2014/15
                                                                                                          • Figure 74: Southern Water, infrastructure details, 2010/11-2014/15
                                                                                                          • Figure 75: Total Capital Expenditure of Southern Water Services, 2010/11-2014/15
                                                                                                          • Figure 76: Analysis of sewerage capital expenditure by Southern Water Services, by type, 2013/14-2014/15
                                                                                                          • Figure 77: Analysis of water capital expenditure by Southern Water Services, by type, 2013/14-2014/15
                                                                                                      • Statutory Water Companies

                                                                                                          • Figure 78: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2014/15
                                                                                                      • Thames Water Utilities

                                                                                                            • Figure 79: Financial Analysis of Thames Water Utilities, 2011-15
                                                                                                            • Figure 80: Number of properties billed by Thames Water Utilities, 2013/14-2014/15
                                                                                                            • Figure 81: Thames Water Utilities, infrastructure details, 2010/11-2014/15
                                                                                                            • Figure 82: Total capital expenditure of Thames Water Utilities, 2010/11-2014/15
                                                                                                            • Figure 83: Analysis of sewerage capital expenditure by Thames Water Utilities, by type, 2013/14-2014/15
                                                                                                            • Figure 84: Analysis of water capital expenditure by Thames Water Utilities, by Type, 2013/14-2014/15
                                                                                                        • United Utilities Water

                                                                                                            • Five delivery partners selected for £3.4 billion AMP6 programme
                                                                                                                • Figure 85: Financial Analysis of United Utilities Water, 2011-15
                                                                                                                • Figure 86: Number of properties billed by United Utilities, 2013/14-2014/15
                                                                                                                • Figure 87: United Utilities, infrastructure details, 2010/11-2014/15
                                                                                                                • Figure 88: Total capital expenditure of United Utilities, 2010/11-2014/15
                                                                                                                • Figure 89: Analysis of sewerage capital expenditure by United Utilities, by type, 2013/14-2014/15
                                                                                                                • Figure 90: Analysis of water capital expenditure by United Utilities, by type, 2013/14-2014/15
                                                                                                            • Wessex Water

                                                                                                                  • Figure 91: Financial Analysis of Wessex Water, 2011-15
                                                                                                                  • Figure 92: Number of properties billed by Wessex Water, 2013/14-2014/15
                                                                                                                  • Figure 93: Wessex Water, infrastructure details, 2010/11-2014/15
                                                                                                                  • Figure 94: Total capital expenditure of Wessex Water, 2010/11-2014/15
                                                                                                                  • Figure 95: Analysis of sewerage capital expenditure by Wessex Water, by type, 2013/14-2014/15
                                                                                                                  • Figure 96: Analysis of water capital expenditure by Wessex Water, by type, 2013/14-2014/15
                                                                                                              • Yorkshire Water Services

                                                                                                                    • Figure 97: Financial analysis of Yorkshire Water Services, 2011-15
                                                                                                                    • Figure 98: Number of properties billed by Yorkshire Water, 2013/14-2014/15
                                                                                                                    • Figure 99: Yorkshire Water, infrastructure details, 2010/11-2014/15
                                                                                                                    • Figure 100: Total capital expenditure of Yorkshire Water Services, 2010/11-2014/15
                                                                                                                    • Figure 101: Analysis of sewerage capital expenditure by Yorkshire Water Services, by type, 2013/14-2014/15
                                                                                                                    • Figure 102: Analysis of water capital expenditure by Yorkshire Water Services, by type, 2013/14-2014/15
                                                                                                                • Northern Ireland Water

                                                                                                                      • Figure 103: Financial analysis of Northern Ireland Water, 2011-15
                                                                                                                  • Market Forecast

                                                                                                                    • Key Points
                                                                                                                      • Future challenges facing the water and sewerage sector
                                                                                                                          • Figure 104: UK Population, by Region, 2013-2025
                                                                                                                        • Water Act 2014 to provide new opportunities for water and sewerage companies
                                                                                                                          • Forecast Capital Expenditure
                                                                                                                            • England & Wales - AMP6 2015-20
                                                                                                                              • Figure 105: Average expected combined household bill, by water and sewerage companies, 2014/15 and 2019/20
                                                                                                                              • Figure 106: 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 107: Total expenditure (Totex) allowance for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
                                                                                                                                • Figure 108: Total expenditure (Totex) allowance for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
                                                                                                                                • Figure 109: Forecast capital expenditure for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
                                                                                                                                • Figure 110: Forecast capital expenditure for AMP6 in England & Wales, by water & sewerage company, 2015/16-2019/20
                                                                                                                                • Figure 111: Forecast capital expenditure for AMP6 in England & Wales, by water only company, 2015/16-2019/20
                                                                                                                              • Thames Tideway Tunnel
                                                                                                                                  • Figure 112: Estimated cost of Thames Tideway Tunnel, 2014/15-2021/22+
                                                                                                                                • Scotland Investment Programme 2015-2021
                                                                                                                                  • Figure 113: Forecast Capital Expenditure for Scottish Water, 2015/16-2020/21
                                                                                                                                • Northern Ireland Investment Programme 2015/16-2020/21
                                                                                                                                • Further Sources & 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 2016

                                                                                                                                      £995.00 (Excl.Tax)