Inflation pushes half year operating costs up 8.9% at Scottish Water

Total operating costs at Scottish Water for the six months to 30 September 2022 rose 8.9% year-on-year to £561m. Regulated revenue for the report period increased by 6.9% to £685m.

According to the company’s interim report and accounts, operating and repair costs were up 8.6% to £303m “predominantly due to inflationary impacts” on payroll; a 48% surge in chemical costs to £8.3m; and an £8m hike in cloud computing costs to £9m. “Like-for-like controllable” costs after discounting incident and weather-related cost; bad debt charges and new operating costs were up 6.3% on those of the previous year at £187.2m.

The increase in revenue reflected:

• an average charge increase of 4.2% for household and wholesale customers applied on 1 April 2022;

• new connections to services; and

• increased wholesale consumption which has returned to near pre-pandemic levels.

Net interest payable in the report period was down 3.7% to £78 million. At the close of the period the weighted average interest cost of outstanding long-term debt in the company’s regulated business fell to 3.1% from 3.2% in March 2022. This was mainly due to the repayment of loans of £65m with a weighted average interest rate of 5.0%. No new loans were drawn down during the period from the Scottish government.