United Utiliities has delivered its best-ever operational performance, according to its full year results for the year ended 31 March 2021 published this morning.

Highlights of the first year of the AMP7 investment programme, which has progressed well, include:

• Performing strongly - continued to deliver excellent operational performance through the COVID-19 pandemic
• Continuing to improve resilient and reliable services to more than 7 million people
• Leading the way on customer satisfaction; earning rewards against both C-MeX and D-MeX
• No serious pollution incidents and around one third reduction overall
• Lowest ever level of leakage and water supply interruptions more than halved
• On track for industry leading 4* environmental performance for 2020
• Exceeded targets to 2020 reducing emissions by 73%; delivering carbon pledges to net zero by 2030
• £300m sustainable bond - 3 times oversubscribed and the lowest ever 8 year+ corporate sterling coupon
• Innovative application of Systems Thinking driving efficiency and performance

Since accepting Ofwat’s AMP7 Final Determination, United Utiliities has increased its totex plan by a further £300 million in relation to confirmed extensions to its environmental programme, spend to save opportunities and the acceleration of its digital transformation. The water company said it expects all of this expenditure to be “fully remunerated through regulatory mechanisms.”

Commenting on financial performance, United Utilities highlighted the firm’s financial resilience – a robust financial performance and strong balance sheet and an A3 stable credit rating with Moody's.

Underlying profit after tax of £383m was down 21%, in line with expectations . In line with AMP7 dividend policy, the company will pay a total dividend of 43.24p.

On operational performance, United Utilities said this had been strong across the broad range of its activities – the utility met or exceeded over 80 per cent of its performance commitments for the year. United Utilities delivered particularly strong performance in the areas of hydraulic flood risk resilience and pollution where it delivered another year of sector leading performance with no serious pollution incidents for the second consecutive year.

The company also delivered leakage at its lowest ever level and more than halved supply interruptions to customers - outperforming targets on both these key service delivery measures.

The leakage performance improvement has been achieved through a combination of techniques. Alongside satellite technology to geo-locate potential leaks in the network and sniffer dogs to accurately locate the leak, United Utilities has deployed 66,000 acoustic loggers since 2019 with a further 29,000 being installed over the next year.

The firm has also recruited around 20 per cent additional leakage detection resources, further supported this year by its first intake of apprentices on a bespoke two year technical training scheme, mitigating the risk of a national shortage in leakage technicians. Over AMP7, United Utilities is planning to reduce total leakage by at least 15 per cent, with a delivery plan that continues to make best use of available technologies and is flexible to ensure the firm can embrace the heightened level of innovation in this area.

Carbon reduction and climate resilience influence strategic and operational decisions

With regard to greenhouse gas emissions and climate change, United Utilities said that carbon reduction and climate resilience had influenced both its strategic and operational decisions for over two decades.

The company said it has ambitious plans and commitments to go much further - in May 2020 the utility announced six carbon pledges including a new carbon emissions reduction target by adopting a science-based approach.

United Utilities has reduced its operational emissions by over 70 per cent in recent years, primarily by investing in its own renewable energy generation capabilities and purchasing green energy from the national grid.

The firm described its portfolio of renewable energy assets as “operating satisfactorily” and said investment had delivered the returns it had targeted, commenting:

“Having maximised the opportunities to date and established long-term contracts to secure a proportion of our renewable energy out to 2045, we are now looking at how we can recycle our investment in order to achieve further strong returns and take the next steps in our plans to achieve net zero by 2030.”

The company singled out its biggest AMP7 challenge as its internal flooding ODI and this is the measure that has yielded the largest penalty this year. As part of the £300 million extension to its AMP7 totex plans, United Utilities will be investing around £100 million in Dynamic Network Management (DNM) - a ground breaking application of Systems Thinking using state of the art sensors and predictive machine intelligence to move to a more proactive management of the wastewater network. The new digital capability is expected to improve service to customers and improve performance against its internal flooding ODI.

Haweswater Aqueduct - utility will use Direct Procurement for Customers (DPC) approach 

Reporting on the company’s flagship Haweswater Aqueduct Resilience Programme (HARP), in November 2020, United Utilities successfully completed the replacement of the Hallbank section of the Haweswater Aqueduct, part of a critical asset that delivers around a third of its total water production to 2.5 million people in Cumbria, Lancashire and Greater Manchester.

Work to replace the majority of the aqueduct is expected to be undertaken using a direct procurement for customers (DPC) approach – the utility has been preparing for a DPC tender in 2021/22. If the tender process proceeds as planned, contract award is anticipated in 2023, with construction to begin later in the AMP.

Steve Mogford - transformation to an innovative digital utility has helped deliver another year-on-year improvement

Steve Mogford, Chief Executive Officer, said:

Our transformation to an innovative digital utility has helped deliver another year-on-year improvement against key targets that our stakeholders value most, such as leakage, pollution and customer service.”

"Protecting and improving the environment is one of our core responsibilies, including the quality of the water we return to our rivers and coastlines. We also have a duty to respond to climate change, which is why we've planted two million trees since 1995 and plan to plant another million by 2030. We've also spent £250 million to make our services more resilient to changes in weather patterns.

“We're delighted to be a signatory to the United Nation's Race to Zero campaign and to be targeting net zero by 2030. In support of this, we're delivering on our six carbon pledges, including a commitment to meet our science-based targets, to have a completely 'green' fleet of vehicles by 2028 and to restore 1,000 hectares of peatland by 2030.

"This great start to AMP7 provides a strong platform for us to deliver further good operaonal performance, play our full part in the economic recovery within the communities we serve and to continue to protect our natural environment".