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United Utilities Grp (UU.)

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Monday 11 August, 2008

United Utilities Grp

United Utilities Water PLC Draft Business Plan ...

United Utilities Group PLC

11 August 2008


United Utilities Water PLC today published its draft water and wastewater
business plan covering the 2010-15 period. This plan has been submitted to
Ofwat as part of the 2009 water price review process and builds on the
company's strategic direction statement published in December 2007.

The total capital investment programme contained within the plan, including
infrastructure renewals expenditure, is approximately £4 billion (2007/08
prices), comprising approximately £1.6 billion for the water service and
approximately £2.4 billion for the wastewater service. Investment to meet
regulatory quality standards, enhance our service to customers and maintain the
supply/demand balance is forecast at around £2 billion, almost half the total

The 2010-15 capital investment programme, which takes account of the geography
and history of the north west region, aims to meet existing standards of
service, address new, higher quality standards and tackle the challenge of
climate change. It also includes investment for issues first identified in
previous price reviews where the clear need for investment has only recently
been confirmed. This includes a programme of work to deal with unsatisfactory
intermittent discharges.

United Utilities Water expects to improve its efficiency across the 2010-15
period. The company is aiming for a 1.5% annual improvement in its underlying
operating efficiency, although operating expenditure is likely to increase
overall due to cost pressures in areas such as power and rates. United
Utilities Water is also targeting an average improvement in efficiency of 3% in
respect of its capital investment programme.

United Utilities Water estimates that to finance this plan an average real,
fully post-tax return of 4.7% is required. This compares with a cost of capital
of 5.1% assumed by Ofwat at the last price review in 2004 and reflects the
sustained reduction in the cost of debt finance available to the water sector.
The company will, however, wish to reassess its financing costs at the time of
its final business plan submission to Ofwat in spring 2009, in light of
financial market conditions at that time.

To deliver this plan, United Utilities Water proposes an average annual real
price increase of 2.7% across the five-year period, although average household
bills are expected to increase by just over 2% in real terms on average each
year. The company believes this is consistent with the aim set out in its
strategic direction statement that bills, on average, should rise no faster
than medium term household income growth.

The draft business plan can be viewed on United Utilities' website at

United Utilities expects to receive feedback from Ofwat on its draft business
plan in the autumn and is scheduled to submit its final business plan in April

United Utilities' contacts

For further information please contact:

Philip Green, Chief Executive                        +44 (0) 1925 237000     
Tim Weller, Chief Financial Officer                  +44 (0) 1925 237000     
Gaynor Kenyon, Communications Director               +44 (0) 7753 622282     
Rob Hughes, Investor Relations Manager               +44 (0) 1925 237019     
Dominic Fry/Tom Murray, Tulchan Communications       +44 (0) 20 7353 4200    

United Utilities Group's ordinary shares trade on the London Stock Exchange and
its ADRs, each equal to two ordinary shares, trade over the counter under the
Trading Symbol "UUGRY".