Re-inventing the water company

THIS WILL come as a shock to most domestic gas, electricity, telephone and water customers but, whisper it softly, they may actually be getting a better deal out of the so-called "multi-utilities" than shareholders. This is the drift of a joint paper published yesterday by the various utility regulators. They have concluded not only that there are benefits to be had from being customers of these many-headed beasts but that further regulation to protect the consumer is unnecessary.

As if to reinforce the point, their report coincided with a fall in profits at Yorkshire Water and a lower-than-expected dividend payout. Proof, if it were needed, that Yorkshire is now doing to investors what it used to do routinely to its customers.

It is true that the multi-utilities - United Utilities, Hyder and Scottish Power - have underperformed the market. But fear not, they are fighting back on behalf of their shareholders. They have accepted the harsh fact that no matter how many different services can be crammed down one pipe, at the end of the day, the business will remain a boring old utility and will attract a stock market rating to match.

In an attempt to overcome this they are re-inventing themselves as go- go high-technology providers or simply trying to conceal their true identity. Thus United Utilities (North West Water and Norweb) is considering floating off its telecoms arm, which has invented a technique for linking customers to the Internet through the electricity socket. South West Water, meanwhile, has decided to rename itself Pennon Group.

The company used to be associated with the highest water charges in the land, contaminated supplies and dirty beaches. From now on it hopes to become as well known for being "a group of related environmental companies operating in the fields of waste management, environmental instrumentation and construction services".

The theory is that all utilities, not just the multi-utilities, are due for a rerating. Hope springs eternal.