Utility Week

Utility Week 17th June 2016

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Finance & Investment This week Welsh Water to spend more on customers Not-for-profit water company earmarks £32m for projects designed to benefit its customers Welsh Water has made available an extra £32 million for projects it said will benefit customers as it announced its financial results for 2014/15. The money is the equivalent of the dividends that are paid to shareholders in other companies but, because of Welsh Water's not-for-profit ownership model, it will be ploughed into projects to benefit customers. It comes in addition to the company's £1.7 billion capital investment programme for 2015-20, and follows a positive set of results for the utility. Overall, Welsh Water made an underlying profit of £18 million during the year; its operating costs were £297 million with capital expenditure of £279 million. Thames Water and Dee Valley Water have also released their financial results for the year. Despite tougher new price controls, Thames reported an operating profit of £742.2 million – up from £675.6 million for 2014/15 – which it attributed to sales of sur- plus land as well as higher revenues. Meanwhile, Dee Valley Water reported a drop in oper- ating profit of £900,000, as its revenues were affected by tougher PR14 price controls. However, the downturn was mitigated by an improvement in operating expenses and financing costs, the group said. Chief executive Ian Plenderleith said: "We have made significant commercial changes to the company which have increased our operational performance and sharp- ened our focus on providing an even better service for our customers." LV EnErgy Eon shareholders back Uniper spin-off Eon shareholders have approved the completion of the spin-off of its conventional power genera- tion and energy-trading activi- ties into new company Uniper. Plans to transfer a majority stake in the new company to Eon shareholders were given the green light by investors that own almost 100 per cent of Eon's share capital at the annual general meeting in Essen. Uniper and Eon have effectively been operationally independent since Uniper came into being at the beginning of this year. The split will leave Eon free to focus on "energy networks, customer solutions and renewables". A 53.5 per cent stake in Uniper will be transferred to Eon shareholders, with Eon retaining the remaining shares. Investors will receive one Uniper share for every 10 Eon shares they own. ElEctricity EDF 'mulls plant sale to bankroll Hinkley' EDF is mulling the sale of its coal and gas-fired plants in Brit- ain to help finance Hinkley Point C, Reuters has reported. The news agency quoted two unnamed sources who said Barclays has informally approached potential buyers on the supplier's behalf to gauge their interest. EDF owns two coal-fired plants in the UK – Cottam and West Burton A – and one com- bined cycle gas turbine plant – West Burton B. All have secured capacity market contracts. It also owns the country's existing nuclear fleet but the sources say it is not considering the sale of those assets. ElEctricity Grid seeks to recover black start costs National Grid has spent £113 million on black start contracts with Drax and SSE, Ofgem has revealed. The regulator has launched a consultation on the back of a National Grid request to recover the costs of the contracts. Under black start contracts generators are paid to help re-energise the transmission system in the event of a national power outage. Ofgem said National Grid has "spent significantly more money" on these services than the agreed cost target and has applied to recover these costs from generators and suppliers through the "income adjusting events" process. The regulator said it could disallow "some or all of the expenditure on these contracts if it judges that the case for recovering the money has not been met". Welsh Water has a £1.7bn investment programme Utility WEEK | 17th - 23rd JuNe 2016 | 19 Stock watch 235 240 245 250 255 260 Dong energy share price, 10 - 14 June 9 Jun 10 Jun 13 Jun 14 Jun Shares in Dong Energy rose briefly and then fell aer the company's initial public offering on the Copenhagen stock exchange last week. The shares were offered at 235 krone (£25.19), valuing the company at 98.2 billion krone (£10.53 billion). More than 70 million shares – 17.4 per cent of the share capital – were sold, bringing in 17.1 billion krone (£1.83 billion). Aer peaking at 258.7 krone, the shares were trading at 241.7 krone as UW went to press.

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