United Utilities

Parent company: United Utilities plc

Regulated utility: North West Water Ltd

North West Water has grown dramatically since privatisation - primarily by acquisition - to become a multi utility company. It bought the electricity utility Norweb and has created a new company Vertex to handle the common business services required by the two regulated utilities. Subsequently it has also developed its core skills in asset management winning the major outsourcing contract for Welsh Water. Now the name North West Water has been dropped (except by OFWAT) in favour of United Utilities for its water utility business.

Waste water issues are a major concern for the group. Huge progress has been made in improving wastewater discharges. However the North West is a heavily industrialized area and this will require considerable further work especially on combined sewer overflows. As a consequence it has the biggest capital programme of any water company.

United Utilities has gone further than any other company in integrating the management of its regulated electricity and water businesses. It now has just one management team and this integrated approach is being taken at every level in the business. It is even now looking at combining water and electricity sites to realise property savings.

Asset management has become a major business in its own right following the success in winning the Welsh Water contract. This business has recently been renamed "Infrastructure management". The group also has a number of international water asset management contracts

United Utilities has the largest capital investment programme over the next five years of any water company, at over £3 billion. It has re-tendered its engineering services contract. Bectel lost out to Montgomery Watson. The belief is that Montgomery Watson will be able to deliver significant cost reductions and has skills better suited to the large number of smaller projects in AMP3. Now it has appointed three contractor led consortia to implement the detailed design and construction stage.

In a major change of policy the company has also now decided to go down the route of framework contracts and reduce the number of suppliers. It is looking to standardise across the business and significantly reduce the number of different asset types

Non-regulated business

The main non-regulated businesses are:

Business process outsourcing (Vertex)

This business was called Customer management outsourcing and comprises the trading name Vertex. This is basically a customer billing and management operation. It is steadily winning external contracts and profits are rising.

Infrastructure management

This is the old asset management business. It utilises skills from the core regulated utility to win asset management business with external companies. Its major success has been the four year contract with Welsh Water to oererate all their water and wastewater treatment works.

Web site: www.unitedutilities.com