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Sewerage (Industrial Report) - UK - May 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). As such, companies are more likely to concentrate on effective asset management and maintenance rather than capital replacement.”

– 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 sewerage-related 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 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’ spending 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
        • 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)
            • More capital spending geared towards improvements in sewerage infrastructure
              • Figure 1: UK capital expenditure on sewerage services, 2008/09-2012/13
            • Non-infrastructure maintenance and enhancement spending dominates sewerage capital expenditure
              • Figure 2: Analysis of sewerage capital expenditure in England and Wales by water and sewerage companies, by type, 2012/13
            • Capital expenditure by Scottish Water fell strongly in 2010/11, and is now expected to stabilise 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, 1990-2015
                    • Transfer of private sewers in England and Wales
                      • 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
                                                • 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, 1990-15
                                                            • The Drinking Water Directive
                                                              • Revised Bathing Water Directive
                                                                  • Figure 6: UK coastal bathing water compliance with Bathing Water Directive for mandatory coliform standards, 2009-13
                                                                • Transfer of private sewers in England and Wales
                                                                  • Figure 7: Capital expenditure on private sewers in England and Wales, by water and sewerage company, 2009-13
                                                                • The Flood and Water Management Act 2010
                                                                  • Water Bill 2013
                                                                  • Industry Structure

                                                                    • Chapter summary
                                                                      • England and Wales
                                                                          • Figure 8: Details of water and sewerage companies, as of March 2014
                                                                          • Figure 9: Details of companies that supply sewerage services to water-only companies, as of April 2014
                                                                          • Figure 10: Sewerage customers of water and sewerage companies, household and non-household, 2011/12 and 2012/13
                                                                          • Figure 11: Sewerage customers of water and sewerage companies, household and non-household, 2012/13
                                                                        • Sewage treatment processes
                                                                          • Sludge (biosolids) treatment
                                                                            • Regulators
                                                                              • Performance
                                                                                  • Figure 12: Sewer flooding indicators in England and Wales, by company, 2011/12-2012/13
                                                                                  • Figure 13: Ofwat final determinations for sewer flooding expenditure, by water and sewerage company, 2010-15
                                                                                  • Figure 14: Expenditure to reduce flooding risk for properties in England and Wales, by water and sewerage company, 2010/11-2014/15
                                                                                • Scotland
                                                                                  • Northern Ireland
                                                                                  • Capital Expenditure

                                                                                    • Chapter summary
                                                                                      • Capital expenditure
                                                                                        • Figure 15: Total capital expenditure, by water and sewerage companies in England and Wales, 2005-10 and 2010-15
                                                                                        • Figure 16: Total capital expenditure, by water-only companies in England and Wales, 2005-10 and 2010-15
                                                                                        • Figure 17: Actual UK capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                        • Figure 18: UK capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                        • Figure 19: UK capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                        • Figure 20: Analysis of sewerage-related capital expenditure in England and Wales, by company, 2007/08-2012/13
                                                                                        • Figure 21: Analysis of sewerage-related capital expenditure, by water and sewerage companies in England and Wales, 2007/08-2012/13
                                                                                        • Figure 22: Analysis of sewerage capital expenditure in England and Wales, by water and sewerage companies, by type, 2011/12-2012/13
                                                                                        • Figure 23: Analysis of Scottish Water capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                        • Figure 24: Analysis of Scottish Water capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                        • Figure 25: Progress of Scottish Water to date in the five year investment programme 2010/15
                                                                                        • Figure 26: Analysis of Northern Ireland Water capital expenditure on water and sewerage services, 2008/09-2012/13
                                                                                        • Figure 27: Analysis of Northern Ireland Water capital expenditure on water and sewerage services graph, 2008/09-2012/13
                                                                                      • Process plant expenditure
                                                                                        • Figure 28: UK capital and process plant expenditure, by the water and sewerage industry, 2008/09-2012/13
                                                                                      • Civil engineering expenditure
                                                                                          • Figure 29: Civil engineering construction output for the sewerage industry in Great Britain, 2009-13
                                                                                        • Building expenditure
                                                                                          • Figure 30: UK capital and building expenditure, by the water and sewerage industry, 2008/09-2012/13
                                                                                        • Other expenditure
                                                                                          • Figure 31: UK capital and other expenditure, by the water and sewerage industry, 2008/09-2012/13
                                                                                          • Figure 32: UK capital expenditure on water and sewerage services, by expenditure area, 2012/13
                                                                                        • Sewer renovation and repair
                                                                                          • Figure 33: Sewers renovated and replaced in England and Wales, by company, 2008/09-2012/13
                                                                                      • Company Analysis

                                                                                        • Chapter summary
                                                                                          • England and Wales
                                                                                            • 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 sewerage capital expenditure by Anglian Water Services, 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 sewerage 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 sewerage 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 sewerage 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 sewerage 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 sewerage 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 sewerage 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 sewerage 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 sewerage 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
                                                                                                  • Figure 83: Analysis of sewerage capital expenditure by Yorkshire Water Services, by type, 2011/12-2012/13
                                                                                                • Scottish Water
                                                                                                    • Figure 84: Financial analysis of Scottish Water, 2009-13
                                                                                                  • Northern Ireland
                                                                                                      • Figure 85: Financial analysis of Northern Ireland Water, 2009-13
                                                                                                      • Figure 86: Total capital expenditure of Northern Ireland Water, 2008/09-2012/13
                                                                                                  • Market Forecast

                                                                                                    • Chapter summary
                                                                                                      • Future expenditure
                                                                                                        • Figure 87: Annual price limits for 2010/11 to 2014/15, by water and sewerage companies
                                                                                                        • Figure 88: Annual price limits for 2010/11 to 2014/15, by water-only companies
                                                                                                        • Figure 89: Average expected household bill, by water and sewerage companies, 2009/10 and 2014/15
                                                                                                        • Figure 90: Average expected household water bill, by water-only companies, 2009/10 and 2014/15
                                                                                                        • Figure 91: UK population, by region, 2013-25
                                                                                                      • Forecast capital expenditure
                                                                                                        • Capital expenditure during AMP5 2010-15
                                                                                                          • Figure 92: Total proposed capital expenditure by water and sewerage companies in England and Wales, 2010-15
                                                                                                          • Figure 93: Forecast UK capital expenditure on the water and sewerage industry, 2010/11-2014/15
                                                                                                          • Figure 94: Capital expenditure on water and sewerage services in England and Wales during AMP5, 2010/11-2014/15
                                                                                                          • Figure 95: Capital expenditure on water and sewerage services in England and Wales during AMP5, 2010/11-2014/15
                                                                                                          • Figure 96: Forecast capital expenditure for Scottish Water, 2010/11-2014/15
                                                                                                          • Figure 97: Forecast capital expenditure for Scottish Water graph, 2010/11-2014/15
                                                                                                          • Figure 98: Forecast investment programme for Northern Ireland Water, 2010/11-2014/15
                                                                                                          • Figure 99: Forecast investment programme for Northern Ireland Water graph, 2010/11-2014/15
                                                                                                        • England and Wales – AMP6 2015-20
                                                                                                            • Figure 100: Proposed total expenditure for AMP6 in England and Wales, by water and sewerage company, 2015/16-2019/20
                                                                                                            • Figure 101: 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 102: 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.

                                                                                                                  Sewerage (Industrial Report) - UK - May 2014

                                                                                                                  £995.00 (Excl.Tax)