Severn Trent Plc, the U.K.’s second biggest water company, said full-year earnings were consistent with its expectations as it continues to benefit from higher customer prices.  Profit before interest and tax for water and sewage probably rose between 10 percent and 12 percent from 413 million pounds last year, the Birmingham, England-based company said today in a statement. U.K. water regulator Ofwat has allowed Severn Trent, which supplies more than 8 million people in western England, to raise water and sewage prices by 5.9 percent from April 1 to pay for customer service and infrastructure improvements. The utility is awaiting the outcome of charges for reporting false leakage data.  Severn Trent said in November that it can’t estimate the impact of any fines resulting from three charges by the Serious Fraud Office that it misreported leakage data between 2000 and 2002. The alleged fraud violations were committed under previous management and no individuals will be charged, the company said at the time.

Southern Water has been fined £20.3 million for poor service and deliberately misreporting information, Ofwat has said.The firm’s shareholders will bear the entire cost of the fine, which will not be passed on to customers. Southern Water systematically manipulated information to conceal its true performance, industry regulator Ofwat said. Southern Water, which provides water and waste-water services to nearly two million households in Kent, Sussex, Hampshire and the Isle of Wight, said it accepted Ofwat’s fines. The firm misreported its customer service performance to the regulator over a period before October 2005. It also failed to make compulsory compensation payments of £25 to customers over poor service, known as guaranteed standard payments. Ofwat chief executive Regina Finn said: “Southern Water behaved unacceptably in deliberately misreporting customer service performance to Ofwat and systematically manipulating information to conceal its true performance over an extended period of time and the company has acknowledged this.” The fine follows a two-year investigation which was sparked in October 2005 when Southern Water’s new management team discovered irregularities. They found incorrect figures had been reported to Ofwat relating to the firm’s response times to customers who had contacted its customer service centre. The £20.3 million penalty is made up of two fines imposed by Ofwat, one for Southern Water’s misreporting of customer service statistics and the other for its failure to make guaranteed standard payments. Southern Water chief executive Les Dawson said: “This announcement draws a line under a shameful period in the company’s history when an area of the business was deceiving our customers and the regulator. The new management team has put procedures into place to ensure this will never happen again and once again we apologise to our customers.”

A 10-mile barrage could be built across the Severn estuary to harness the power-generating potential of its tides in one of the world’s biggest construction projects, ministers have announced. Business Secretary John Hutton described the potential of the £14 billion project to boost Britain’s energy supplies and cut greenhouse gas emissions as “breathtaking”. Initial assessments suggest the tidal barrier could supply as much as five per cent of the UK’s electricity and create 40,000 jobs. A tidal barrage here could produce as much as a 20th of the UK’s electricity, and create up to 40,000 jobs It would be fitted with more than 200 turbines and is likely to be constructed between a point south of Cardiff and Weston-super-Mare in Somerset. The funnel-shaped Severn estuary is particularly attractive for a barrage because it has the second highest tidal range in the world, after the Bay of Fundy in Canada. The project would also help Britain meet tough new green targets, to be outlined tomorrow (Wednesday) by the European Commission, demanding an increase in the energy generated from renewable sources from three per cent to 15 per cent of the total by 2020. Mr Hutton said: “The Severn Estuary has some of the best tidal potential in the world and could more than double the current UK supply of renewable electricity, and contribute significantly to targets for renewable energy and CO2 emissions reduction. Business Secretary John Hutton claims the Severn Estuary ‘could more than double the current UK supply of renewable electricity’. “We must understand the cost and the impact that a project of this scale could have, not least the environmental, social and economic effects. But the need to take radical steps to tackle climate change is now beyond doubt. “Tough choices need to be made. We must consider all our low-carbon energy options.” He has now ordered a full-scale feasibility study that is expected to last two years before a full public consultation in early 2010. The study will assess the costs, benefits and impact of a tidal barrier and identify a single preferred project from a number of options that have been proposed. It will also consider whether harnessing the power of smaller, individual tidal lagoons could be a viable alternative. But Mr Hutton’s backing for the scheme infuriated environmental campaigners, who say it will have a devastating impact on precious local habitats. Wader birds, in particular, would suffer badly if a barrier was built because the marsh habitat that they rely on would be ruined. The Royal Society for the Protection of Birds said it would put thousands of birds, salmon and other fish at risk. The estuary contains mudflats, saltmarshes, rocky islands and food that support some 65,000 birds in winter. But ministers say green groups could not sensibly reject both nuclear power stations and big renewable energy projects. Mr Hutton said the study would look at a range of options for power generation from the Severn Estuary tidal range, taking into account environmental factors. “It will include a strategic environmental assessment of plans for generating electricity from the Severn Estuary tidal range to ensure a detailed understanding of its environmental resource, recognising the nature conservation significance of the estuary,” he said.

Severn Trent, the UK water supplier, has received no ‘appropriate approaches’ from possible takeover suitors, said CEO Tony Wray today. Wray said that his concentration was focused on ‘delivery of efficient services’, declining to comment on any potential interest in the company. ‘If we had any appropriate approaches then we are aware of our duties and we would have announced so,’ Wray said. His comments come amid a flurry of speculation about M&A activity in the UK water sector, following Kelda Group’s acceptance of an offer from the Saltaire Water consortium yesterday. On the release of its half year results, the company was unable to be specific about the eventual cost of the flooding that occurred this summer, though so far it has cost 23.2 mln stg, brought down to 18.2 mln stg after 5 mln stg of interim insurance payments. The eventual cost is estimated at between 25 mln stg and 35 mln stg, with insurance covering between 10 mln stg and 20 mln stg. Inspections are ongoing at 150 sewage pumping stations, the outcome of which is not yet known. ‘We believe that most of this will be covered by insurance,’ said finance director Mike McKeon. ‘We can’t be more specific because we still have to do the work to ascertain whether there is any long-term damage to these stations.’ The company’s first half results were inline with analysts expectations. Pretax profit for the period rose to 161 mln stg from 142.3 mln stg. First half dividend was up 6.9 pct to 24.3p, from 22.8p, and earnings per share was up to 47.6p from 42.1p. The results threw up no surprises for analysts. ‘They flagged the costs before and we expected them to be that sort of size,’ said one analyst about the flooding. ‘They haven’t got all the bills in, but it’s in line with what they said previously.’ Severn Trent was last week charged by the Serious Fraud Office for the misreporting of leakage data between 2000 and 2002. The company is yet to receive details of the charges or a timescale for proceedings. ‘These things are out of our control,’ said Wray. ‘The first stage is that the charges will be listed in the Magistrates Court. Only then will we discern the nature of the evidence and only then will we be able to consider the company position.’ The UK water regulator, Ofwat, is currently in the early stages of developing the price review for the pricing period 2010-2015. Early suggestions from Ofwat are that price caps for water companies will likely benefit customers rather than shareholders. About the price review (PR09), Wray said: ‘PR09 is still two years away and we are in the early stages of consultations. What PR09 will clearly focus on is the best possible way to find the mix between maintaining the necessary investment and ensuring there is a fair deal for consumers, but also investors.’

Ofwat, the UK water regulator, said it plans to fine Southern Water 20.3 mln stg for misreporting information prior to October 2005 and for poor service to customers. In a statement, Ofwat chief executive officer Regina Finn said: ‘Southern Water deliberately misreported its customer service performance to Ofwat and systematically manipulated information to conceal the company’s true performance over an extended period of time.’ Finn said the company had benefitted from the misreporting at the last two price reviews by being able to raise its prices to customers. However, Southern Water has now been told that the shareholders will bare the brunt of the fine, not the customers.

UK water regualtor Ofwat has appointed the second new company since privatisation to supply water and sewerage services to residential customers. Independent Water Networks Ltd (IWNL) has been granted a licence to supply the services to 950 homes in Corby, Northamptonshire. Ofwat requires that IWNL charges the customers no more than previous supplier Anglian Water and provides a service of equal standard.

It might have slipped your memory, but this week is national Water at Work Week, so here’s an image to catch your attention. It’s published as sustainability experts Envirowise remind employers in Worcestershire that they should involve their staff in helping to reduce the significant amount of water which still goes to waste in workplaces every day. Research has shown that UK businesses are tipping the financial equivalent of just under 40 bottles of champagne down the drain every minute in wasted water. In Worcestershire, an Envirowise poll revealed that as many as 62 per cent of employees surveyed felt their employer was doing “nothing they were aware of” to address the issue of water wastage. John Barraclough, regional manager for the West Midlands, said: “With water being wasted daily across bathrooms, kitchens and factory floors, it is vital employees are encouraged to be the eyes and ears of any business campaign to reduce water use. “More than half of those surveyed in the West Midlands said they have seen evidence of water waste around their workplaces, including dripping taps, leaking pipes, hoses left running or dishwashers being run only half-full. “Employers should ensure they make information available to staff on how they can help prevent and report incidents of waste.” The best ways to share information include using posters to raise workplace awareness, adding information to the staff intranet or newsletter, offering training on environmental topics and running staff initiatives or campaigns. To help employers get started, Envirowise is inviting firms to sign up to its water efficiency campaign, the Big Splash, where companies can access free information packs, workshops and interactive tools, as well as a confidential telephone advice line. Mr Barraclough said: “The results will be improved profitability and reduced environmental impact. Since the launch of the Big Splash in June 2004, we have helped UK businesses identify water-related cost savings worth more than £8 million. West Midlands companies should make sure they grab their share.” For more information about Water at Work Week or to register your interest in the Big Splash initiative, visit www.envirowise.gov.uk/waww or call the advice line on 0800 585 794.

Michael Pritchard of Ipswich, UK, has invented a bottle that makes foul-smelling, infected or polluted water drinkable in seconds. Pritchard hopes the bottle will find use in disaster regions where access to clean drinking water is vital. The military, however, seems to become his first customers. The military think the bottles will have huge benefits for soldiers who hate drinking iodine-flavoured water. Michael Pritchard’s water purification bottle can clean up any water - including fecal matter - using a filter that cuts out anything longer than 15 nanometers, which means that even viruses can be filtered out without the use of chemicals. That is pretty amazing, but it does not come cheap. The bottles are GBP 190.