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United Utilities Counts the Cost of Lancashire Water Bug Incident

Written by: Keith Tully

Reviewed: Wednesday 23rd September, 2015

United Utilities has said that its underlying profits for the first half of the financial year were down by £25 million due to what it is referring to as the “water quality incident” that impacted much of Lancashire in recent weeks.

The incident saw residents and businesses in 300,000 properties throughout Lancashire told that they should only consume their tap water after they’ve boiled it due to supplies being affected by a parasitic bug.

Having first issued its ‘boil water’ warning after a potentially illness-inducing parasite was identified at a United Utilities treatment works on August 6th, the warning remained in effect for a month.

The problems caused widespread dissatisfaction among what amounts to 10 per cent of United Utilities’ UK customer base but particular problems for businesses operating in Lancashire’s larger towns and cities, including Blackpool, Preston, Chorley and Flyde.

A trading statement from United Utilities explained in some detail how the incident has impacted the business in recent months.

“Customer satisfaction is a key area of focus and so we were very disappointed that a significant water quality incident occurred this summer in parts of the Lancashire region, and we are continuing to investigate the cause,” the company said.

“We recognise the inconvenience this placed on many of our customers and are very grateful for their patience and understanding.”

United said that it is in the process of paying out compensation to individuals and companies that were impacted by the lack of healthy water supplies in the Lancashire area last month.

Compensation cheques are being posted in relation to the problems, with all those affected expected to have received their compensation before the end of September.

“Reported operating profit in the first half of the year will be impacted by customer compensation and one-off costs, totalling around £25 million, relating to the aforementioned water quality incident,” the company said in putting the matter into a financial context.

United also pointed out that it had to deploy “significant extra resources” during the water supply incident in order to return those supplies to the healthy standards that its customers generally take for granted.

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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