Drought-order firm's profits rise

Non-essential use of water has been banned

Sutton & East Surrey Water, the first firm allowed to impose a drought order in England and Wales since 1995, has seen annual profits rise 20% to £6.4m.

The Environment Agency granted the firm a drought order in May, thereby banning the use of non-essential water.

Price increases contributed to the firm's 15% increase in annual turnover.

It is the latest to announce a healthy rise in water profits, coming after those from Severn Trent, Northumbrian, Thames, United Utilities, and Pennon.

These raft of strong profits came after regulator Ofwat said operators could increase charges if they made certain investments.

Ofwat's 2005-2010 review set price limits that allowed water companies to raise prices by an average of up to 4.2% a year on top of inflation.

On target

Announcing its results, Sutton said boreholes - which are the source of about 85% of the firm's water - had reached "very low levels but that careful management meant its Kent reservoir in Bough Beech was reasonably full.

Water restrictions Filling of privately owned swimming pools other than for medical treatment Watering of gardens and allotments, parks or sports or recreation surfaces by sprinkler or hosepipe Filling of ornamental ponds other than fishponds Operation of car washes Washing of vehicles or aircraft other than for safety or hygiene Cleaning of building exteriors other than windows and cleaning of industrial premises Cleaning of windows by hosepipes or sprinklers Operation of ornamental fountains or cascades Send us your comments

Under the six-month order, Sutton has been allowed to forbid car washing, the filling of swimming pools and watering of parks and sports grounds.

The company, which is owned by Deutsche Bank, supplies water to 650,000 people in the South East.

The area covered by the water firm spreads from Horley, in Surrey, up to Sutton in south London, and reaches from Cobham and Dorking in Surrey over to Edenbridge in Kent.

The firm said it had successfully met Ofwat's leakage targets.

The firm said the past year's costs were £22.5m, as against the £23m Ofwat expected.

The news comes after Thames Water recently revealed it had seen a 31% rise in pre-tax annual profits to £346.5m, even as it missed its target for reducing leakages for the third consecutive year.