Utility firm eyes Transco network

United Utilities today confirmed its interest in operating the regional gas distribution networks being sold by energy group National Grid Transco.

The Warrington-based company ruled out an outright bid for the networks but said it would look for contracts to operate them on behalf of financial investors.

Preliminary contact has been held with finance partners over potential new business arising from the sale of the networks, United said in a statement to the London Stock Exchange today.

United Utilities stated: “Our analysis of the opportunities available through this process does not support a proposition requiring funding through the issue of new equity.”

National Grid announced on November 20 that it was beginning the process of selling up to five of its eight regional gas distribution networks.

It believes selling some of the networks it inherited from Transco will enhance competitiveness, bring greater reliability and drive down prices.

However, the sale hinges on industry regulator Ofgem agreeing to the separation of the networks, with a decision expected in April.

United Utilities already does infrastructure maintenance work for Welsh Water in a deal worth £550m (€782m) and supports Scottish Water Solutions in its £1.8bn (€2.5bn) three-year capital investment programme.

Both contracts are managed by its Contract Solutions division which posted an 18% increase in turnover to £207.2m (€294.8m) and a 14% hike in operating profits to £32m (€45m) in United’s half-year results on Wednesday.

United unveiled a 4.4% rise in pre-tax profits to £171m (€243m) in the six months to September 30 after seeing improved performances across all its businesses.

Turnover in its regulated utilities division improved 6.4% to £642.5m (€914m), with operating profits up 1.3% to £254.9m (€362.6m).