The water-only company has obtained a licence to extend its service offering to Scotland, where a competitive market environment already operates.
SESW’s new retail business – Sutton and East Surrey Water Services – has already started to win customers outside its existing supply area in England, the firm confirmed, and has secured “long-term commitments” from its largest customers.
In its 2015/16 annual report, the company said it had made “steady progress” with its preparations for market opening in April 2017.
“We have established a well-governed programme to ensure that our wholesale business will be ready to comply with the requirements of the industry-wide market operator, while also forming a new retail business to capitalise on the opportunities that a competitive market will offer,” it said.
Group turnover remained unchanged at £63 million, despite a drop in customer bills (in real terms). Operating profit dropped by £3.7 million to £20.1 million, as operating costs increased 9.4 per cent to £42.9 million.
Profit before tax was down to £14.3 million as interest charges fell 20 per cent, largely as a result of lower inflation reducing the indexation charge on the company’s £100 million index-linked bond.
The company said it welcomed Ofwat’s Water 2020 consultation. However, managing director Anthony Ferrar said the firm has “concerns” about the way in which the move to the use of CPI in place of RPI will be managed.
“We look forward to having clarity on areas that can be settled at an early stage,” it said.