Utility Week

UTILITY Week 17th October 2014

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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UTILITY WEEK | 17Th - 23rd OcTObEr 2014 | 17 Finance & Investment Stock watch 820 810 800 790 780 United Utilities share price, 9 - 14 october 9 Oct 10 Oct 14 Oct 13 Oct 1920 1900 1880 1860 1804 1820 severn trent share price, 9 - 14 october ratings agency Moody's report, "UK Water Sector: Stable outlook despite challenging price review", released this week, has maintained its stable outlook for the sector over the next 12 to 18 months. It said United Utilities (UU) and Severn Trent have "considerable headroom against minimum financial parameters for their current A3 ratings at the operating company level". UU and Severn Trent saw gains of almost 2 per cent and 1.5 per cent respectively on the day of publication. This week Energy company profits fall by 20% Lower generation profitability and plant closures reduce total profits across the big six suppliers Energy company profits slumped 20 per cent last year compared with the year before as a result of lower generation profitability, according to Ofgem. The regulator published its analysis of large energy sup- pliers' consolidated segmental statements (CSS) for 2013 last week, showing that total profits across the big six fell from £3.5 billion in 2012 to £2.8 bil- lion last year. "Overall, 2013 profits were at their lowest level since the companies started producing the statements in 2009," a statement from Ofgem said. The regulator attributed the losses to lower profits in generation, due in part to plant closures as well as higher fuel costs. Although the average dual fuel consumer bill rose from £1,174 in 2012 to £1,225 last year, the regulator said the amount of profit earned per customer fell from £53 to £48 as costs relating to wholesale buying, network use and government policy grew. Wholesale costs in 2012 were £612 per customer but reached £628 last year, Ofgem's report shows. At the same time, 'other direct costs' – which include network costs, policy costs and depreciation and amor- tisation – increased from £354 per customer to £392 last year. Ofgem has required the big six to provide data on CSS since 2009, but included a breakdown of direct costs beyond wholesale and operating costs for the first time this year. JA WATEr Welsh Water plans to install solar panels Welsh Water has submitted plans to install 20,000 solar pan- els at its Five Fords wastewater treatment works near Wrexham. The renewable energy project will help the water company to meet its own target to reduce its carbon footprint by 25 per cent by 2015, it said in a statement. Mike Pedley, Welsh Water's head of energy, said: "The treatment and transportation of drinking water and wastewater are energy-intensive processes which are reflected in our annual energy bill of over £40 million. "By generating our own energy we can reduce our oper- ating costs, which will then help to keep our customers' bills as low as possible." EnErgY Partnership to invest in onshore wind Ecotricity has formed a partner- ship with global construction firm Skanska to put forward plans for 350MW of onshore wind energy projects. The joint venture, known as Skylark, aims to invest £500 mil- lion in onshore wind projects to supply energy to 200,000 homes by 2018. Three development sites, representing a generating capacity of 100MW, have already been identified, Ecotricity said in a statement. EnErgY Primrose Solar signs £29m financing deal Primrose Solar has agreed a £29 million finance package with investment manager M&G Investments to finance four UK solar farms. The solar operator said in a statement that the inflation- linked financing deal was repay- able over 18.5 years and would be secured against its four solar farms, which have a total installed capacity of 39MW. "This landmark transaction injects long-term institutional financing into the emerging solar power sector," said M&G Investments head of project and infrastructure finance, Tim Huband. "Given this is a relatively new sector seeking institutional investment, it is essential for deals to be structured to protect client capital and ensure risks are appropriately rewarded. The investment characteristics on offer from this sector are attrac- tive to our clients and we are keen to do more," he added. The sites have been opera- tional since March 2014 and are located in Glamorgan, Norfolk and Dorset. Primrose Solar's solar portfolio currently stands at 175MW, either operating or under construction. Slump: profits at lowest level since 2009 9 Oct 10 Oct 14 Oct 13 Oct

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