Restructure Proposals


 

TIDM52IP 
 
RNS Number : 8769G 
Welsh Water Utilities Finance PLC 
09 February 2010 
 

            Welsh Water to restructure to meet efficiency challenge 
Welsh Water is to undertake the biggest re-structuring of the company since it 
was bought by Glas Cymru and became a "not-for-profit" company - to meet the 
toughest efficiency targets the company has ever faced. 
The price limits for the next five years, set last November by the water 
regulator, Ofwat, will allow Welsh Water to invest GBP1.2 billion in water 
quality and other improvements.  But Welsh Water must also reduce its day to day 
operating costs by 20 per cent to enable the average household bill to fall by 
GBP30 before inflation. 
Managing Director, Nigel Annett said: "Since Glas Cymru was formed in 2001 we 
have delivered services to our customers by employing leading companies in the 
business of operating water and sewerage assets.  United Utilities and Kelda 
Water Services have helped Welsh Water improve significantly the quality of 
service we give our customers. 
"Since 2001, United Utilities and then Kelda Water Services have also helped us 
to cut our operating costs by more than any other water and sewerage company in 
the regulated water industry in England and Wales.  But in order to deliver the 
price reductions required over the next five years we must make a further step 
change in our cost efficiency. 
"Over the last nine months we have had lengthy discussions with United Utilities 
and Kelda Water Services, through our five yearly review of the performance 
terms of our contracts with them.  We recognise and appreciate the considerable 
efforts made by both companies to meet our requirements.  However, it has not 
proved possible to reach agreement with either company in relation to the terms 
for a continuation of the contracts for a further five years. 
"In light of this, we have reached agreement with United Utilities that their 
staff will transfer to Welsh Water within the next couple of months, or as soon 
as possible after that.  No agreement with Kelda Water Services has been reached 
however and discussions continue.  In the meantime, Kelda Water Services will 
continue to operate our wastewater assets under the terms of their contract with 
Welsh Water. 
"We have to achieve a reduction of 20 per cent in our day to day running costs. 
We will do this by exploiting our recent large investment in new technology, by 
eliminating duplication in management, and by investing in "green energy" and 
processes to reduce power costs.  This involves a considerable expenditure by 
the company, part of our planned GBP1.2 billion investment programme to improve 
services over the next five years. 
"There will also be a phased reduction, over the next five years, of around 300 
in the number of people required to deliver water and wastewater services to 
Welsh Water's customers, and working closely with staff and our trade union 
colleagues we intend to achieve this through a combination of retirements, 
natural staff turnover and voluntary severance. 
"This major change will be one of the many challenges we face over the coming 
five years, but at all times our priority will remain the essential task of 
guaranteeing safe and reliable services for all our customers, as well as 
safeguarding the environment" said Mr Annett. 
Since 2001 Welsh Water has been owned by Glas Cymru, a "not-for-profit" company. 
 The company delivers drinking water and sanitation services to more than three 
million people in Wales, and some border areas of England. 
 
Ends 
 
Enquiries to the Dwr Cymru Welsh Water press office on +44(0)29 2055 6140 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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