Cost rises hit profits at Electricity North West

Electricity North West, the electricity distribution network operator for the North West of England, saw its profits reduced due to increased property plant and equipment costs.

In the year ended 31 March 2024, the business made lower pre-tax profits of £161.8m (2023: £195.5m) on turnover £598m, which was up slightly on the 2023 income of £594m.

The business also spent £122.4m of the total capital expenditure of £290.9m (2023: £263.4m) was invested directly in network assets (2023: £115.0m).

One of the major employers in the North West of England, employing approximately 2,100 people it is one of 14 distribution network operators regulated by Office of Gas and Electricity Markets (Ofgem).

ENWL’s costs account for around 11% of the typical domestic electricity bill charged by suppliers to North West customers, equivalent to £116 per home for the year ended 31 March 2024.

It is regulated by Ofgem through its RIIO model; Revenue = Incentives + Innovation + Outputs. This model determines how much the Company is allowed to charge customers to fund network investment and operating costs in a regulatory price control period, with allowed revenues adjusted up or down depending on performance against regulatory outputs and incentive mechanisms. 

The price control in operation for the year ended 31 March 2024 was RIIO-ED2, running for a 5-year period from 1 April 2023 to 31 March 2028. 

Speculation is always alive that the consortium of investors led by Japan’s Kansai Electric Power Company and investment fund Equitix, which both own 40% stakes, are looking to sell.

A deal to sell to Chinese investor Redrock collapsed in December 2022 after the government imposed conditions upon the transaction as the business is subject to provisions designed to mitigate the risk to national security.

Spanish utility Iberdrola was rumoured to be planning an offer in 2023 for £3.5 billion.

Most recently, ENW has said it is underway on an investment project worth £14m to transform Manchester’s power network in Eastlands (pictured).

As well as installing 10km of new underground electricity cables, engineers from Electricity North West will be carrying out upgrades at three substations in the area.  

Work is expected to be fully completed in two months with the new cables enabling the continued development and growth in the area. 30,000 local residents and businesses in the area, including the Co-op Live Arena and the Etihad Stadium will also benefit from a continued secure and reliable electricity supply.