Utility Week

UTILITY Week 15th July 2016

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Page 14 of 31

Finance & Investment This week Affinity Water profits plummet to £46m Increase in operational costs of 12.5 per cent contributes to £14 million fall in pre-tax profit Affinity Water has revealed its annual profit before tax fell to £46 million, from £60 mil- lion the previous year, as it announced its results for financial year 2015/16. Operational costs for the year increased by £26.3 million, or 12.5 per cent, to £237.5 million, while revenue rose to £303 mil- lion, from £296 million in the previous financial year. Aggregate, asset-related expenditure for the year was lower than the amount set for 2015/16. This was due to a slower than anticipated start to its metering programme and delays in technology selections for water quality projects. The company spent £103 million in enhancing and maintaining infrastructure and assets in 2015/16, with work expected to accelerate in 2016/17. Schemes included a mains cleaning project on Romney Marsh and an upgrade to Denge water treatment works. Key achievements during the period included install- ing 30,000 meters under a water saving programme; redesigning its largest river intake pumping system to make significant energy savings; and reducing the number of burst mains by 9 per cent. However, one drawback for Affinity was its failure to meet a performance commitment related to the speed of response to supply disruption. The company has now said its approach to reducing unplanned interruptions has been refocused on prevention, restoring supplies and fixing the problems that arise quickly. DM A version of this article first appeared on wwtonline. ELECTRICITY Offshore wind initiative nets £7.9m Major energy firms, the Scottish government and the Carbon Trust will invest £7.9 million to slash the cost of offshore wind. The collaboration to bring new technology innovations to market will be through the Offshore Wind Accelerator (OWA) programme and aims to reduce the cost to below £100 per MWh by 2020. Europe's largest offshore wind developers – including Dong Energy, Eon, Iberdrola, RWE and SSE – have signed up to the ini- tiative and will collectively invest at least £6.4 million over the next four years. The Scottish govern- ment has committed £1.5 million of support for the first year. ELECTRICITY Lifetime lagoon cost matches Hinkley New figures in a report pub- lished by Tidal Lagoon Power have revealed the cost of new- build generation to consumers is reducing and that the lifetime cost of its Swansea Bay tidal lagoon could be the same as that of Hinkley Point C. In its report The New Power Cost League Table 2016, which it plans to update annually, the company found that as enabling contracts are replaced by new competitive contracts, costs are being reduced. It claimed this meant the lifetime cost to con- sumers of its proposed Swansea Bay tidal lagoon could be the same as EDF's Hinkley Point C nuclear plant. Over its operational lifetime of 120 years, tidal lagoon power could cost consumers an addi- tional £25.78 per MWh on their energy bills based on a 90-year Contract for Difference (CfD). Hinkley Point C also costs £25.78 per MWh, based on a 35-year CfD and an operational life of 60 years, but the costs are based on a load factor of 20 per cent for Swansea Bay tidal lagoon and 91 per cent for Hinkley Point C. WATER Customers to have a say in spending Welsh Water will give its three million customers power to influence how the company invests in future services. The not-for-profit water and sewerage company doesn't have shareholders but will let custom- ers help the board prioritise how financial gains, which are projected to be £30 million a year, are spent. The ten-week online consulta- tion will offer a range of options for customers including money off their water and sewerage bills, extra help for people who strug- gle to pay their bills, supporting educational and recreational pro- jects, and investment in pipes, pumps and treatment works. Affinity has refocused on fixing problems quickly UTILITY WEEK | 15TH - 21ST JULY 2016 | 15 Stock watch 15 16 14 13 12 11 RWE SHARE PRICE, MAY - JULY 2016 May 2016 Jun 2016 Jul 2016 20 15 10 0 RWE SHARE PRICE, JULY 2015 - JULY 2016 Nov 2015 Mar 2016 Jul 2016 Jul 2015 RWE shares have climbed since the German utility giant held a capital markets day, heartening investors about the progress of its spin-off Innogy, home of the renewable, retail and grid parts of the business. Analysts at Jefferies were reassured by Innogy's ability to deliver low-risk growth and predict Ebitda to grow from €4.1 billion in 2015 to €4.4 billion in 2018. RWE's share price has risen from €12.13, to €15.13, the highest since August last year. euros euros

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