2005 - 2006 - Pinsent Masons Water Yearbook 2012

UNITED KINGDOM PART 3 (ii): COMPANY ANALYSIS: LOCAL/REGIONAL PLAYERS
UK – Project Aquatrine
2003 UK MoD 25 year PFI Water & wastewater services
Bray Utilities, consisting of Kelda (45%), Earth Tech (Tyco International, 45%) and Kellogg Brown &
Root (USA, 10%) gained Package A of Project Aquatrine, serving 1,100 military sites in South West
England, the Midlands and Wales. The contract is worth £1 billion, 80% of which is being operated by
Yorkshire Water Projects. The project started in December 2003, and generated revenues of £32
million in 2004-05.
UK – Project Alpha
2005 Northern Ireland 25 year PFI Water treatment
Dalriada Water Limited (Earth Tech, Kelda Water Services, and Farrans), is the preferred bidder for
the water treatment Public Private Partnership with The Water Service in Northern Ireland. The £110
million 25 year contract involves designing, building and upgrading four water treatment works
responsible for 400MI per day or some 50% of Northern Ireland's drinking water.
UK – Glas Cymru
In January 2005, Kelda gained a 15 year contract to provide waste water operations and maintenance
services to Dwr Cymru Welsh Water, with anticipated annual turnover around £50 million. The contract
involves the operation of 570 waste water treatment plants and over 13,000km of sewer network.
KWS (Wales) a 100% subsidiary of KWS, began operations on 1 April 2005.
USA - Acquisition of Aquarion
In June 1999, Kelda launched a US$444 million agreed bid for Aquarion, a US water provision
company. The two companies had been co-operating in various projects for a number of years prior to
the bid. The acquisition was completed in January 2000.
Aquarion was incorporated in Delaware as The Hydraulic Company in 1969 to become the parent
company to BHC, a Connecticut corporation founded in 1857. The corporate name was changed to
Aquarion Company in 1991. Aquarion's utility subsidiaries, BHC Company (BHC) and Sea Cliff Water
Company (SCWC, founded in 1873, water provision to 15,000 people in Long Island) collect, treat and
distribute water to residential, commercial and industrial customers, to other utilities for resale and for
private and municipal fire protection. The utilities provide water to 147,000 customers in 30
communities with a population of more than 500,000 people in Connecticut and Long Island, New
York. In 1999, 75% of group turnover came from the company’s water activities. Operating revenues
of the utilities come from the following sources: residential customers; 63%, commercial customers;
16%, industrial customers; 3%, fire protection customers; 13%, and other sources 5%.
Village Water, serving 5,200 customers (18,200 people), was acquired in May 2000. The utilities'
service areas, primarily residential in nature, have experienced an average growth in accounts of
approximately 1% percent per year over the last 10 years. Industrial use has declined significantly in
that time. Kelda is currently concentrating on reducing distribution losses at Aquarion and developing
the company as a base for further expansion into the USA. In 2002-03, the sale of 15,300 acres of
land in Connecticut was completed, resulting in a £60.3 million gain. This money is being invested in
the USA operations.
Aquarion Services, the non regulated water sector business gained a 10 year, $110 million contract to
operate the wastewater treatment plant for the Water Pollution Control Authority in Bridgeport,
Connecticut in April 2003. In total, 11 water and waste water contracts were gained by Aquarion in
New England during 2002-03, with the company currently operating 66 facilities with revenues of
US$19 million per annum.
In April 2002, Kelda acquired four of American Water Works’ companies for US$120 million, plus
US$104 million of debt. These companies cover 17 municipalities and serve 64,000 customers or
177,000 people across New England.
Over 60% of the customers are located adjacent to BHC’s existing franchise. For the year ended 31
December 2000, the aggregate turnover of these was US$47.3million, with a pre-tax profit of US$8.5
348 Pinsent Masons Water Yearbook 2005 – 2006