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Potable Water (Industrial Report) - UK - April 2014

“As the majority of capital projects driven by legislative requirements in the water and sewerage industry are now complete, a shift in focus is expected during the next five-year regulatory period 2015-20 (AMP6), with companies likely to concentrate on effective asset management and maintenance rather than capital replacement. Changes in the regulatory environment going into AMP6 also mean that there will be less emphasis on capital expenditure over the coming years, instead companies will focus on total expenditure and take a ‘whole life cost’ approach to delivering the most effective solutions.”

– Claudia Preedy, Industrial Analyst

This report will explore the following key questions facing the UK Potable Water industry:

  • What are the key drivers for capital investment in the water and sewerage industry? 
  • What have been the water-related capital expenditure patterns by individual water and sewerage companies during the last five years? 
  • Is there a shift from capital projects investment towards asset maintenance? 
  • How will 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’ proposals for total expenditure for AMP6? 

Reference is made in this report to certain categories of capital expenditure, as reported by water and sewerage companies, which are detailed below:

  • Infrastructure renewal expenditure (IRE): refers to the actual expenditure incurred in the financial year in maintaining the operating capability of infrastructure assets through renewal or renovation of those assets. 
  • Maintenance non-infrastructure (MNI): refers to all actual or historic expenditure charged to capital maintenance noninfrastructure. 
  • Infrastructure enhancements – refers to total infrastructure expenditure for enhancement purposes 
  • Non-infrastructure enhancements – refers to total non-infrastructure expenditure for enhancement purposes 


Throughout this report the term capital expenditure refers to gross expenditure rather than investment, which is more often quoted by individual companies. The report is based on the acquisition of tangible fixed assets, and for this reason, investment is segmented into the following:

  • Process plant 
  • Building 
  • Civil engineering 
  • Other 

For the water and sewerage industry, the definitions of each area of expenditure is as follows:

  • Process plant: plant and machinery 
  • Civil engineering: land and buildings, infrastructure and assets, such as water mains, sewers, impounding and raw water storage, reservoirs, dams and sea outfalls, specialised operational properties and structures including intake works, pumping stations, treatment works and bore holes 
  • Building: assets in the course of consumption 
  • Other: fixtures and equipment, vehicles and mobile plant and other non-operational activities

 

Liqueurs - UK - January 2012

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Table of contents

  1. Executive Summary

      • The market
        • Share of turnover generated from metered water services on the rise
          • Figure 1: Turnover from water services in England and Wales, by type, 2008/09-2012/13
        • Ofwat determines that total capital expenditure in England and Wales in the 2010-15 period could rise by 31%
          • Fewer major capital projects undertaken during current regulatory period 2010-15 (AMP5)
            • Water-related capital expenditure up in 2012/13
              • Figure 2: Analysis of water related capital expenditure in England and Wales, 2007/08-2012/13
            • Capital expenditure by Scottish Water was reduced strongly in 2010/11, and is now expected to demonstrate a more stable pattern between 2012/13 and 2014/15
              • Total UK capital expenditure in the water and sewerage industry is projected to fall in 2014/15
                • Figure 3: UK capital expenditure on the water and sewerage industry, 2010/11-2014/15
              • Shift in focus from capital investment towards asset maintenance expected during AMP6
                • Market factors
                  • Water Framework Directive (WDF)
                    • Urban Waste Water Treatment Directive (UWWTD)
                      • Figure 4: Sewerage treatment enhancement expenditure driven by UWWTD in England and Wales, 2090-15
                    • Water Bill 2013
                      • Companies
                        • Industry structure in England and Wales
                          • Industry structure Scotland
                            • Industry structure Northern Ireland
                              • What we think
                              • Introduction

                                • Market factors
                                  • Definitions
                                    • Methodology
                                      • Abbreviations
                                        • Market positioning
                                          • UK economy
                                            • Inflation
                                              • Interest rates
                                                • House prices
                                                  • Consumer spending
                                                    • Manufacturing
                                                      • Business investment
                                                        • Market factors
                                                          • Industry regulation
                                                            • Legislative environment
                                                              • European Water Framework Directive (WFD)
                                                                • Urban Waste Water Treatment Directive (UWWTD)
                                                                    • Figure 5: Sewerage treatment enhancement expenditure driven by UWWTD in England and Wales, 2090-15
                                                                  • Revised bathing water directive
                                                                    • Transfer of private sewers in England and Wales
                                                                      • Water Bill 2013
                                                                      • Industry Structure

                                                                        • Chapter summary
                                                                          • England and Wales
                                                                            • Water and sewerage companies
                                                                                • Figure 6: Details of the water and sewerage companies, as of March 2014
                                                                                • Figure 7: Turnover from water services in England and Wales, by type, 2008/09-2012/13
                                                                              • Water service companies
                                                                                • Figure 8: Details of water-only companies, as of March 2014
                                                                              • Scotland
                                                                                • Northern Ireland
                                                                                • Capital Expenditure

                                                                                  • Chapter summary
                                                                                    • Capital expenditure
                                                                                      • Figure 9: Total capital expenditure by water and sewerage companies in England and Wales, 2005-10 and 2010-15
                                                                                      • Figure 10: Total capital expenditure by water-only companies in England and Wales, 2005-10 and 2010-15
                                                                                      • Figure 11: Actual UK capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                      • Figure 12: UK capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                      • Figure 13: UK capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                      • Figure 14: Analysis of water-related capital expenditure, by water and sewerage companies in England and Wales, 2007/08-2012/13
                                                                                      • Figure 15: Analysis of water-related capital expenditure graph, by water and sewerage companies in England and Wales, 2007/08-2012/13
                                                                                      • Figure 16: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by purpose, 2012-13
                                                                                      • Figure 17: Analysis of water capital expenditure by water-only companies in England and Wales, by type, 2012-13
                                                                                    • Process plant expenditure
                                                                                      • Figure 18: UK capital and process plant expenditure by the water and sewerage industry, 2008/09-2012/13
                                                                                    • Civil engineering expenditure
                                                                                      • Figure 19: UK capital and civil engineering expenditure by the water and sewerage industry, 2008/09-2012/13
                                                                                    • Building expenditure
                                                                                      • Figure 20: UK capital and building expenditure by the water and sewerage industry, 2008/09-2012/13
                                                                                    • Other expenditure
                                                                                      • Figure 21: UK capital and other expenditure by the water and sewerage industry, 2008/09-2012/13
                                                                                      • Figure 22: UK capital expenditure on water and sewerage services, by expenditure area, 2012-13
                                                                                    • Water related capital expenditure in England and Wales
                                                                                      • Figure 23: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2007/08-2010/11
                                                                                      • Figure 24: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2011/12-2012/13
                                                                                      • Figure 25: Analysis of water capital expenditure in England and Wales, by water and sewerage companies, by type, 2012-13
                                                                                      • Figure 26: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2007/09-20120/11
                                                                                      • Figure 27: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2012/13
                                                                                      • Figure 28: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2012-13
                                                                                    • Scotland
                                                                                      • Figure 29: Analysis of Scottish Water capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                      • Figure 30: Analysis of Scottish Water capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                      • Figure 31: Progress of Scottish Water to date in the five year investment programme 2010-15
                                                                                    • Northern Ireland
                                                                                      • Figure 32: Analysis of Northern Ireland Water capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                      • Figure 33: Analysis of Northern Ireland Water capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                  • Company Analysis

                                                                                    • Chapter summary
                                                                                      • Water holding companies
                                                                                        • Anglian Water Services
                                                                                          • Figure 34: Financial analysis of Anglian Water Services, 2009-13
                                                                                          • Figure 35: Number of properties billed by Anglian Water, 2011/12-2012/13
                                                                                          • Figure 36: Anglian Water, infrastructure details, 2008/09-2012/13
                                                                                          • Figure 37: Total capital expenditure of Anglian Water, 2008/09-2012/13
                                                                                          • Figure 38: Analysis of water capital expenditure by Anglian Water, by type, 2011/12-2012/13
                                                                                        • United Utilities Water
                                                                                            • Figure 39: Financial analysis of United Utilities Water, 2009-13
                                                                                            • Figure 40: Number of properties billed by United Utilities, 2011/12-2012/13
                                                                                            • Figure 41: United Utilities, infrastructure details, 2008/09-2012/13
                                                                                            • Figure 42: Total capital expenditure of United Utilities, 2008/09-2012/13
                                                                                            • Figure 43: Analysis of water capital expenditure by United Utilities, by type, 2011/12-2012/13
                                                                                          • Northumbrian Water
                                                                                            • Figure 44: Financial analysis of Northumbrian Water, 2009-12
                                                                                            • Figure 45: Number of properties billed by Northumbrian Water, 2011/12-2012/13
                                                                                            • Figure 46: Northumbrian Water, infrastructure details, 2008/09-2012/13
                                                                                            • Figure 47: Total capital expenditure of Northumbrian Water, 2008/09-2012/13
                                                                                            • Figure 48: Analysis of water capital expenditure by Northumbrian Water, by type, 2011/12-2012/13
                                                                                          • Severn Trent Water
                                                                                            • Figure 49: Financial analysis of Severn Trent Water, 2009-13
                                                                                            • Figure 50: Number of properties billed by Severn Trent Water, 2011/12-2012/13
                                                                                            • Figure 51: Severn Trent Water, infrastructure details, 2008/09-2012/13
                                                                                            • Figure 52: Total capital expenditure of Severn Trent Water, 2008/09-12/13
                                                                                            • Figure 53: Analysis of water capital expenditure by Severn Trent Water, by type, 2011/12-2012/13
                                                                                          • South West Water
                                                                                            • Figure 54: Financial analysis of South West Water, 2009-13
                                                                                            • Figure 55: Number of properties billed by South West Water, 2011/12-2012/13
                                                                                            • Figure 56: South West Water, infrastructure details, 2008/09-2012/13
                                                                                            • Figure 57: Total capital expenditure of South West Water, 2008/09-2012/13
                                                                                            • Figure 58: Analysis of water capital expenditure by South West Water, by type, 2011/12-2012/13
                                                                                          • Southern Water Services
                                                                                            • Figure 59: Financial analysis of Southern Water Services, 2009-13
                                                                                            • Figure 60: Number of properties billed by Southern Water, 2011/12-2012/13
                                                                                            • Figure 61: Southern Water, infrastructure details, 2008/09-2012/13
                                                                                            • Figure 62: Total capital expenditure of Southern Water Services, 2006/07-2010/11
                                                                                            • Figure 63: Analysis of water capital expenditure by Southern Water Services, by type, 2011/12-2012/13
                                                                                          • Thames Water Utilities
                                                                                              • Figure 64: Financial analysis of Thames Water Utilities, 2009-13
                                                                                              • Figure 65: Number of properties billed by Thames Water Utilities, 2011/12-2012/13
                                                                                              • Figure 66: Thames Water Utilities, infrastructure details, 2008/09-2012/13
                                                                                              • Figure 67: Total capital expenditure of Thames Water Utilities, 2008/09-2012/13
                                                                                              • Figure 68: Analysis of water capital expenditure by Thames Water Utilities, by type, 2011/12-2012/13
                                                                                            • Dwr Cymru Cyfyngedig
                                                                                              • Figure 69: Financial analysis of Dwr Cymru Cyfyngedig, 2009-13
                                                                                              • Figure 70: Number of properties billed by Dwr Cymru Cyfyngedig, 2011/12-2012/13
                                                                                              • Figure 71: Dwr Cymru Cyfyngedig, infrastructure details, 2008/09-2012/13
                                                                                              • Figure 72: Total capital expenditure of Dwr Cymru Cyfyngedig, 2008/09-2012/13
                                                                                              • Figure 73: Analysis of water capital expenditure by Dwr Cymru Cyfyngedig, by type, 2011/12-2012/13
                                                                                            • Wessex Water
                                                                                              • Figure 74: Financial analysis of Wessex Water, 2009-13
                                                                                              • Figure 75: Number of properties billed by Wessex Water, 2011/12-2012/13
                                                                                              • Figure 76: Wessex Water, infrastructure details, 2008/09-2012/13
                                                                                              • Figure 77: Total capital expenditure of Wessex Water, 2008/09-2012/13
                                                                                              • Figure 78: Analysis of water capital expenditure by Wessex Water, by type, 2011/12-2012/13
                                                                                            • Yorkshire Water Services
                                                                                              • Figure 79: Financial analysis of Yorkshire Water Services, 2009-13
                                                                                              • Figure 80: Number of properties billed by Yorkshire Water, 2011/12-2012/13
                                                                                              • Figure 81: Yorkshire Water, infrastructure details, 2008/09-2012/13
                                                                                              • Figure 82: Total capital expenditure of Yorkshire Water Services, 2008/09-2012/13
                                                                                            • Statutory water companies
                                                                                              • Figure 83: Analysis of water capital expenditure in England and Wales, by water-only companies, by type, 2011/12-2012/13
                                                                                          • Market Forecast

                                                                                            • Chapter summary
                                                                                              • Future expenditure
                                                                                                • Figure 84: Annual price limits for 2010/2011 to 2014/2015, by water and sewerage companies
                                                                                                • Figure 85: Annual price limits for 2010/2011 to 2014/2015, by water only companies
                                                                                                • Figure 86: Average expected household bill, by water and sewerage companies, 2009/2010 and 2014/2015
                                                                                                • Figure 87: Average expected household water bill, by water-only companies, 2009/2010 and 2014/2015
                                                                                                • Figure 88: UK population, by region, 2011-25
                                                                                              • Forecast capital expenditure
                                                                                                • Capital expenditure during AMP5 2010-15
                                                                                                  • Figure 89: Total proposed capital expenditure by water and sewerage companies in England and Wales, 2010-15
                                                                                                  • Figure 90: Forecast UK capital expenditure on the water and sewerage industry, 2010/11-2014/15
                                                                                                  • Figure 91: Capital expenditure on water and sewerage services in England and Wales during AMP5, 2010/11-2014/15
                                                                                                  • Figure 92: Capital expenditure on water and sewerage services in England and Wales during AMP5 graph, 2010/11-2014/15
                                                                                                  • Figure 93: Forecast capital expenditure for Scottish Water, 2010/2011-2014/2015
                                                                                                  • Figure 94: Forecast capital expenditure for Scottish Water graph, 2010/2011-2014/2015
                                                                                                  • Figure 95: Forecast investment programme for Northern Ireland Water, 2010/2011-2014/2015
                                                                                                  • Figure 96: Forecast investment programme for Northern Ireland Water graph, 2010/2011-2014/2015
                                                                                                • England and Wales – AMP6 2015-20
                                                                                                    • Figure 97: Proposed total expenditure for AMP6 in England and Wales, by water and sewerage company, 2015/16-2019/20
                                                                                                    • Figure 98: Proposed total expenditure for AMP6 in England and Wales graph, by water and sewerage company, 2015/16-2019/20
                                                                                                  • Thames Tideway Tunnel
                                                                                                    • Scotland Investment Programme 2015-2021
                                                                                                      • Figure 99: 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 (Industrial Report) - UK - April 2014

                                                                                                          £995.00 (Excl.Tax)