Cost increases dent Cambridge Water profits

SHARP increases in costs have made a significant dent in operating profits at Cambridge Water, which supplies St Ives, Ramsey and surrounding areas. Nonetheless, customers continue to benefit from the second-lowest water charges in the country in spite of

SHARP increases in costs have made a significant dent in operating profits at Cambridge Water, which supplies St Ives, Ramsey and surrounding areas.

Nonetheless, customers continue to benefit from the second-lowest water charges in the country in spite of living in one of the driest and fastest-growing areas of the UK, said managing director Stephen Kay. (Sewerage services are provided by Anglian Water.)

Following publication of the company's regulatory report and accounts for the financial year ending March 31, 2009, Mr Kay explained: "Like all companies, in this challenging economic climate we have had to weather the storm.

"Our operating profit has fallen 11 per cent to �4.6million, largely as a result of an increase in operating costs.

"During the last financial year we have witnessed a 19 per cent increase in electricity costs to �868,000 and a 25 per cent increase in the cost of the chemicals we use to treat the water to �231,000. The price Cambridge Water pays the Environment Agency for licences to abstract water also rose by 10 per cent."

Mr Kay said the cold weather during a 10-day period in January 2009, when the average night time temperature was minus five degrees, had also led to a dramatic increase in the number of leaks and burst mains.

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"At one stage we were working round the clock to cope with 38 burst mains in just one week, putting our total repair costs up 20 per cent to �2million."

Despite these challenges, Cambridge Water bills rose just 2.7 per cent, which was lower than the national average price rise authorised by the industry regulator Ofwat. Levels of customer service, as measured by Ofwat, were also high, with the company scoring 286.6 points out of a maximum 287.

The company's ability to deliver high standards across its network has also been maintained.

A report, issued last week by the Drinking Water Inspectorate, confirmed Cambridge Water customers continue to benefit from some of the highest quality drinking water in the country and, even with the pressures of the cold weather, it has been able to meet its leakage target.

Mr Kay explained: "Our ethos of continually investing in our network for the long-term benefit of our customers has meant our company is built on strong foundations.

"At Cambridge Water for every �100 we receive from customers' bills, we spend �60 on operating costs and �23 in renewing and enhancing the network. After paying �11 in tax and interest, �6 remains for investors.

"During our 156-year history the company has witnessed both financial and environmental changes to the climate in which it operates. This year, our operating profit may be lower than for 2007/08, but I believe we remain able to balance the needs of our customers, investors and the environment."

INFORMATION: The full report is at www.cambridge-water.co.uk

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