Utility Week

UTILITY Week 17th March 2017

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Finance & Investment This week Macquarie sells its 26% stake in Thames Australian infrastructure fund divests remaining holding in Thames Water after 11 years Macquarie is selling its remain- ing 26.3 per cent stake in Thames Water to Borealis Infrastructure and Wren House Infrastructure Management. Martin Stanley, global head of Macquarie Infrastructure and Real Assets (MIRA), said: "We feel privileged to have been associated with Thames Water for such a long period of time and are pleased to have significantly increased investment levels and improved operational performance." Macquarie led a consortium that bought Thames Water from German energy giant RWE in 2006 for an estimated £8 billion. Since then notable stakes have been bought by the BT Pension Scheme (13 per cent), the Abu Dhabi Investment Authority (9.9 per cent) and the China Investment Corporation (8.7 per cent). In May last year, Macquarie confirmed that it was looking to divest its remaining stake, and the Financial Times reported at the time that the sale was expected to raise between £1 billion and £1.5 billion, "according to people close to the process". Over the 11-year period in which Macquarie-managed funds have held interests in Thames Water, the business has delivered a capital investment programme of more than £11 billion to maintain, update and expand its network. This average investment is more than 200 per cent higher than the five-year period before privatisation in 1989 and 72 per cent more than the period aer privati- sation until MIRA first invested in Thames Water. LV WATER Brexit will push up the cost of debt Loss of access to European Investment Bank (EIB) funds could cost water utilities tens of millions of pounds, the chief executive of Water UK has warned. Michael Roberts told an audi- ence of water industry execu- tives last week that EIB funding will no longer be available to UK water companies aer Brexit. Speaking at his organisation's annual City Conference, Roberts said the loss of access to the EIB would be costly. "The additional cost of raising debt from other sources could amount annually to tens of millions of pounds over the course of the next asset manage- ment plan period," he insisted. ELECTRICITY Renewables will be hit by rates hike Renewable energy groups have expressed their dismay at the lack of any support for projects due to be hit by the upcoming business rate hike. In the run-up to the Budget there had been numerous calls to delay the upcoming business rate revaluation because of the impact it would have on small businesses – including many renewable energy providers. Some of them will see their rates increase by as much as 900 per cent. In his speech to Parliament, chancellor Philip Hammond offered some relief for small businesses and said the govern- ment was looking at making the revaluation process "smoother and more frequent" in order to avoid the "dramatic increases that the present system can deliver". However, the chief execu- tive of the British Hydropower Association, Simon Hamlyn, told Utility Week: "Many small hydro operators will go out of busi- ness, solely down to absurd and unaffordable rates increases." It was an argument supported by the Solar Trade Association. ENERGY Supplier costs rise 3% in first quarter The estimated annual cost of supplying energy to consum- ers increased by 3 per cent over the first three months of 2017, according to Ofgem's Supplier Cost Index. The index tracks the con- tribution of network charges, government obligations and the wholesale cost of electricity and gas to the total energy supply cost base. The rise was primarily due to big increases in the wholesale costs of electricity and gas, but also rising costs from govern- ment obligations. Thames: £11bn investment delivered in 11 years UTILITY WEEK | 17TH - 23RD MARCH 2017 | 21 Stock watch 10 9 8 7 EDF SHARE PRICE, ONE MONTH (€) 21 Feb 28 Feb 7 Mar 14 Mar 100 80 60 40 20 0 EDF SHARE PRICE, TEN YEARS (€) 2006 2008 2010 2012 2014 2016 EDF shares have dropped to an all-time low aer the French energy giant revealed details of its plans to raise €4 billion through a share issuance programme to fund its investments, including in Hinkley Point C. The price plummeted nearly 15 per cent from €9.27 to €7.92 on the day of the announcement and at the time of going to press had fallen even further to €7.48. At their peak in 2007, shares were trading at more than €80.

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