WATER and electricity giant United Utilities today reported profits of more than £1.2 million a day.

The firm said it was now better prepared to deal with the risk of a drought than in previous summers.

And it insisted it was confident it could hang on to domestic customers when the electricity market opens up to competition later this year.

The firm, parent company of North West Water and Norweb, saw pre-tax profits rise by 3.7 per cent to £460 million in the year to April with turnover up to £2.15 billion.

Its North West Water division made an operating profit of £394 million after £27.4 million was paid out in customer rebates and free leak repairs.

The firm said £502 million was also invested in improving water supplies during the year, and it claimed it was now better equipped to deal with drought conditions and that its progress in reducing leaks had been praised by water watchdog OFWAT. More than 28,000 customers took advantage of a free leak repair service offered to domestic customers.

United Utilities' electricity supply business saw operating profits fall to £32.5 million because of mild weather and lower tariffs,

From December this year the electricity market will be opened up and householders will be able to choose their supplier.

"We look forward to the opportunities and challenges afforded by full competition at the end of 1998," said chief executive Derek Green.

"We are well prepared with our existing customers already enjoying some of the lowest prices in the UK."

But Mr Green said that substantial growth in profits from its domestic water and electricity business would become more difficult in the future because of pressure from regulators.

He said the firm would continue to look increasing profits from development of other activities including telephone services.

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