Relax water pricing, demands United

United Utilities, owner of North West Water, yesterday called for a sweeping overhaul of the regulatory regime with prices being adjusted only once every 10 years to take account of the water industry's huge capital investment programmes.

At present, the industry is subject to price reviews every five years but chief executive John Roberts said this was inappropriate when some capital spending projects ran over 30-year periods.

North West Water's current £3bn investment programme was second only in the UK to the Channel Tunnel Rail Link in terms of size, he said. "To bring everything to a grinding halt every five years doesn't seem to be terribly efficient."

Ofwat, the industry regulator, would still be able to adjust prices at five-yearly intervals to set new efficiency and service targets. But price changes to reflect spending on environmental and water quality programmes – by far the industry's biggest cost – would be implemented every 10 years.

Mr Roberts was speaking as United Utilities, which also owns the electricity distribution business Norweb, reported an 11 per cent increase in pre-tax profits on its continuing businesses to £328m for the year ended 31 March. Stated pre-tax profits for the previous year were £485m but this included a £190m profit from the sale of supply business Norweb Energi to TXU.

United Utilities was well placed to capitalise as rival utility companies outsourced the operation of their networks, he said. United Utilities estimated that its contract to manage the Welsh Water network would be worth £500m over five years.

He said the group would be interested in acquiring adjoining distribution networks and specifically mentioned three electricity companies – Manweb, Northern Electric and Yorkshire Electricity.