Philip Green, chief executive of United Utilities, the Warrington-based FTSE 100 giant, said the water market was 'totally different' from that controlling electricity and gas.
While conceding that higher energy costs and the higher cost of borrowing money to fund improvements to water quality and supply would be important factors when UU meets regulators to agree its targets and pricing for the period 2010-2015, Mr Green said he did not expect prices to 'go up by more than people's earnings'.
"Our annual price rises have been four or five per cent - and the average household in the north west pays around 85p per day for water and wastewater. It is important that people understand that we are in a different category to electricity and gas."
In the last 12 months UU spent more than £800m on improvements to the region's coast, rivers and sewer networks, as part of its £3bn investment commitment between 2005-2010.
Mr Green said that while UU was 'fully funded' up to 2010, the company would need to go into the money markets to fund the next stage of improvements.
"Since the credit crunch, everyone knows the cost of borrowing money has risen.
"The regulator has to look at the capital expenditure required, like our (energy) costs and the cost of debt - the cost of debt is going up.
Energy costs
He added that the energy costs of UU'S water business were expected to rise around 60 per cent in the current financial year, while investment in its water infrastructure was likely to remain steady over the five years 2010-2015, at about £3bn.
This year UU's energy costs were around £40m.
Regulator Ofwat will set the price regime for that period following a consultation process.
"We are already talking to the regulators. It's a tough challenge, but we don't expect prices to go up higher than incomes," Mr Green said.
The company sold its electricity distribution business for £1.8bn last year, and pledged to return £1.5bn to investors in August.
Mr Green said UU's bad debt costs in the year had risen £12m from £39m to £51m as a result of the worsening economic outlook, as customers failed to pay bills.
In the year to March 31, underlying profits increased by 17 per cent to £476m.
Revenue from continuing operations rose 19 per cent to £2.3bn.
A final dividend of 31.47p will be paid, taking the total for the year to 46.67p, up 3.8 per cent.
Tweet
