Water parasite hits United Utilities profits by £25 million

Water contaminated by a parasitic bug in Lancashire during August this year has resulted in UK water services company United Utilities having to pay out compensation to hundreds of thousands of households in the county.

It was reported on Wednesday that the charge of GBP25m paid out in compensation and related costs will be booked United Utilities’ first-half and will be reflected in its profits. The company reportedly began sending out compensation payments of between GBP50 and GBP60 to the 300,000 affected customers, earlier in September. It could also face a penalty from the industry watchdog.

United Utilities customers across much of Lancashire were advised to boil tap water before drinking, following testing that found traces of the microscopic cryptosporidium bug at Franklaw water treatment works near Preston on 6 August 2015. People in Blackpool, Chorley, Fylde, Preston, South Ribble and Wyre were all affected by the discovery of the cryptosporidium bug, which can cause sickness and diarrhoea. Some shops and supermarkets were said to have run out of bottled water as a result of the outbreak.

The company also advised its customers to run dishwashers on hot settings and only drink coffee from machines which served water at a temperature of least 80C (176F). The company had to flush out 2,500 miles of pipework and said it took a month to eradicate the problem completely.

United Utilities has released a trading update, in which it said: “We deployed extensive additional resources, including enhanced UV treatment, to restore the water quality to the high standards expected as quickly as possible, and full service was restored in early September.

“We recognise the inconvenience this placed on many of our customers and are very grateful for their patience and understanding.”

According to United Utilities, which provides water and sewerage services for about seven million people in north west England, its underlying operating profits for the six months to September were in line with expectations, although they were set to be lower than a year earlier as a result of new regulated price controls.

Industry watchdog  Ofgem has ruled that utilities companies have to make their pricing structure clearer to enhance competition and make it easier for customers to shop around for a good deal, which is said to have cost the firm an additional GBP5m.