Anglian Water’s owners saw pre-inflation power costs decrease in the six months to September 2022, compared with the previous year.
In a market update Anglian Water Services Financing said there were several factors behind the reduction. First, energy use fell in both the water and wastewater units. Consumption had been high in the waste water business in the six months to September 2021, because because of the continuing impact of wet weather in winter 2020/21. That did not apply in 2022. Secondly, the company was unable to abstract water from rivers during the hot summer months of 2022 because river levels were too low. That reduced energy consumption in the water business unit.
Thirdly the company increased self-generation, which further reduced power purchases. Power sales reduced operating costs by £3.8 million.
Finally the company had hedged its energy costs before the most significant energy price rises occurred. It said, “We have a robust energy hedging programme which means that our costs have not risen in line with wholesale prices as we were fully hedged for the year to March 2023 in advance of the most significant market increases. Our hedged prices are materially below the government cap and therefore, as with furlough rates relief in Covid, we have not had to make use of government support for energy price rises.”
The carrying value of the company’s energy derivatives was stated at £72.5 million (current) and £69.2 million (non-current), compared with £34.2 million and £17.9 million, respectively, at the end of September 2021.
The company added, “We continue to undertake activities to diversify our energy hedging in an extremely volatile market.”
Chief executive Peter Simpson, said: “Initiatives, such as our decision to proactively hedge our energy supply last year, have reduced the impact of certain external headwinds and, despite the challenging operational environment, we delivered a robust financial performance in the first half of the year.”
He added, “A third of our energy consumed year-to-date has been from renewable sources, and we anticipate this to be the case across the remainder of the financial year. Our proactivity in switching to self-generation of renewables is a key component of our plan to reach net zero and further supports our energy resilience.”