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This report is segmented between the following sectors:
- Water & Sewerage
- Electricity Generation
- Electricity Transmission
- Electricity Supply
- Gas Transmission
- Gas Supply.
The definitions of each area of expenditure tend to vary between the individual market sectors and can be broadly categorised as follows:
Water & Sewerage
Water resources fall into three main categories:
Resource development, which is the replacement of water resource assets, and the provision of additional capacity to improve current levels of service, and to meet future demand for potable water. Reservoir safety, which is expenditure required under the Reservoirs Act (1975). Aqueduct refurbishment, which refers to raw water aqueducts associated with potable water supplies.
Water treatment expenditure covers:
New development, which is the provision of water treatment assets to provide for new customers, and to accommodate increased use of water by existing customers. Water quality (nitrates), which refers to the provision of water treatment assets or processes to comply with the requirements of the EC Directive on Drinking Water Quality in respect of nitrates. Water quality (other), which is similar to that above only for parameters other than nitrates. Works refurbishment, which is the replacement and preservation of water treatment assets.
Water distribution capital expenditure refers to:
New development, which is the provision of assets to enable distribution systems to accommodate increased usage of water by existing customers, and to provide for new customers. Discolouration, which refers to work on the distribution systems necessary to comply with the Drinking Water Directive with respect to iron and colour, and undertakers' own internal standards for discolouration. Bacteriological quality, which refers to work on distribution systems necessary to eliminate bacteriological problems, and problems of compliance with hygiene codes. All communication pipes, which is the replacement of the pipes that connect the water main in the street to the stop tap at the customer's boundary. Inadequate pressure refers to expenditure on work undertaken to comply with the target level of service relating to adequate pressure. Supply interruptions, which is work undertaken to comply with the target level of service relating to interruptions to supply. Other relining and renewal, which is the relining or similar renovation of distribution networks to prolong asset life, and the renewal of water distribution mains where useful life has ended not covered above.
Includes expenditure on transmission, distribution, generating equipment, plant and machinery, infrastructure, land and buildings and assets in the course of construction. It also includes fixtures and equipment, vehicles and mobile plant and other non-operational activities.
Electricity TransmissionLoad-Related Capex: the installation of new assets to accommodate changes in the level or pattern of electricity or gas supply and demand.Non-Load-Related Capex: the replacement or refurbishment of assets which are either at the end of their useful life due to their age or condition, or need to be replaced on safety or environmental grounds.
Capital expenditure is defined by Ofgem as any expenditure which, for the purpose of the regulatory accounts, has been included in the value of the fixed assets of the distribution business provided that:
(a) the expenditure conforms with at least one of the following: the expenditure relates to the purchase, development or construction of a new asset the expenditure will increase the capacity or functionality of the distribution assets the expenditure will significantly reduce the ongoing maintenance of the assets the expenditure will extend the service life of distribution assets beyond that expected when the assets were originally installed.
(b) the expenditure is determined in accordance with applicable accounting standards. Capital expenditure excludes the following: renewal and replacement of insulation medium in switchgear, whether reprocessed or not capitalised interest revaluation amounts.
Total capital expenditure figures include total allowed capital expenditure and replacement (repex) expenditure. It includes spending on LTS & storage facilities, connections, mains reinforcement, other operational and non-operational.
Gas Transmission Load-Related Capex: the installation of new assets to accommodate changes in the level or pattern of electricity or gas supply and demand. Non-Load-Related Capex: the replacement or refurbishment of assets which are either at the end of their useful life due to their age or condition, or need to be replaced on safety or environmental grounds.
All values quoted in this report are at current prices unless otherwise specified.