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The outgoing boss of United Utilities has warned that much more investment will be needed to end the use of combined sewer overflows in the north of England than in other parts of the country.
Chief executive Steve Mogford, who is due to retire early next year, made the comments during a presentation on the company’s interim financial results for the six months to the end of September.
United Utilities said it reduced the number spills from CSO by 29% last year when compared its 2020 baseline and is on track to exceed its goal of achieving a 33% decrease by 2025.
However, Mogford said legacy of industrialisation in the north of the England means the company will have to spend significantly more than water companies in other areas to upgrade their sewer networks to meet the government’s proposed targets to reduce harm from CSO discharges. More than 60% of sewer systems in UU’s region are combined, compared to under 30% in most of the country.
The organisation has fast-tracked investment of £250 million, in part under its Better Rivers Programme, “to get ahead on AMP8 regulatory requirements”.
Mogford said early indications for the next period suggest the company will need to invest “several multiples of what we would conventionally spend in an AMP period” to meet targets on CSOs, phosphates and the environment. To limit the impact on billpayers during the cost of living crisis, the chief executive suggested that the government will need to adjust down its ambitions on some of these targets.
So far in AMP7, UU has achieved close to five times higher outperformance on outcome delivery incentives (ODIs) than in 2015-20 and is on-track to earn £30 million this year. Across the whole of AMP7, the company is projecting net ODI rewards of £200 million.
Notable achievements include turning complaints around about water discolouration by investing in pipe cleaning; reducing per capita consumption by 11% for the first half of the year compared to the same period in 2021; and hitting leakage reduction targets.
Where the business has benefitted from outperformance, Mogford said it has reinvested the proceeds to bring about further improvements for customers and the environment.
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