Waste is power, says rubbish collection chief

Robert Lea
Waste, and not wind, should be the focus of the new Government’s energy policies, according to the chief executive of one of Britain’s rubbish collectors.

“Energy from waste accounts for about 1.5 per cent of energy produced in the UK and the target is to get that up to 6 per cent by 2015,” Colin Drummond, the chief executive of Viridor, said, “but the Government needs to be much more ambitious than that. Energy from wind farms can be variable, but energy from waste is base load power [it can produce electricity as and when needed].”

Viridor’s operations — clearing bins, running landfill dumps, producing and generating power from landfill gas and burning waste for energy and recycling — are becoming a more important part of its parent, Pennon, whose main operation is running South West Water. Viridor’s 35 per cent surge in profits last year means that it accounted for nearly 30 per cent of Pennon’s pre-tax earnings of £189 million in the year to March 31, which were reported yesterday.

The performance of Viridor, which runs incinerators near Heathrow and at Runcorn, Cheshire, has also enabled Pennon’s management to promise to pay dividends over the next five years at 4 per cent over the rate of the retail price index every year. That is an increase on the last five-year policy of 3 per cent over inflation, which, in the most recent financial year, enabled Pennon to increase its total dividend by 7.4 per cent to 22.55p.

News of the enhanced policy sent Pennon shares higher, finishing 10p up at 499½p, yielding about 4.5 per cent. The dividend growth trumps that of its rivals United Utilities, at 2 per cent, and Northumbrian Water, at 3 per cent. South West Water, whose customers pay the most expensive water bills in the country, helped the group to report a 9 per cent jump in profits to £132 million on a 3 per cent increase. Against a long-term trend of 2 per cent falls in consumption, South West Water said that usage rates remained constant in the past year