NORTHUMBRIAN WATER A summary of our Business Plan Submission to Ofwat - April 1999

OVERALL STRATEGY FOR THE AMP3 PERIOD AND TOP 5 STRATEGIC OBJECTIVES Northumbrian Water's strategy is: "To meet our customers' expectations by delivering an extensive programme of quality and environmental obligations and even higher levels of customer service, while keeping prices stable" By assuming challenging efficiency targets for ourselves, and by balancing risk and opportunity, we have been able to develop an integrated package which will deliver the required outputs, and meet our customers' expectation that prices should not rise in real terms. We will make further improvements to customer services during 1999-2000 and maintain these improved services without increasing prices to customers.

PROPOSED PRICE LIMITS & EFFECT ON AVERAGE BILLS								TOP 6 QUALITY IMPROVEMENTS IN 2000-2005 PERIOD
								1. Introduction of advanced sewage treatment (including disinfection of major discharges) to vastly improve water quality along North East coasts and estuaries.
		2000 -01	2001- 02	2002 -03	2003- 04	2004- 05		2. Improved river water quality through enhancements to sewage treatment works.
1	Proposed Price Limit (Water Service)	0	0	0	0	0		3. Elimination of unsatisfactory sewer overflows by 2005.
2	Average Household Bill (today's prices)	100	100	100	100	100		4. Improvements to water mains to reduce iron and discoloured water problems.
3	Average Household Bill paid	102	105	108	111	114		5. Reductions to lead in water supplies.
1	Proposed Price Limit (Sewerage Service)	0	0	0	0	0		6. Further reducing the risk of cryptosporidia in water supplies.
2	Average Household Bill (today's prices)	143	143	143	143	143
3	Average Household Bill paid	146	150	154	158	162

 

PROJECTED EXPENDITURE NEEDS			Annual average for the AMP3 period (£/property/annum)		WHAT IS DRIVING THE CHANGES IN BILLS		£
1	Total Operating Expenditure - annual average		-		Average household bill in 1999-2000		243
2	Total Capital Maintenance Expenditure - annual average		-		Less	(1) passing on past out-performance	(28)
3	Total Capital Enhancement Expenditure - annual average		-			(2) challenging targets for future efficiency improvements	(9)
					Plus	(3) the impact of improvements in water quality	37
RETURN CAPITAL						(4) improvements in service performance	0
Return on capital - (post tax) (%)			6.40%			(5) Maintaining security of supplies to all customers	0
					Average household bill in 2004-2005		243

For further information contact : Ceri Jones on 0191 383 2222.