NORTHUMBRIAN Water today blamed soaring energy costs and lower usage by recession-hit industry for a 10 per cent drop in annual profits.

The group - which operates as Northumbrian Water in the North East and Essex & Suffolk Water in the South - said pre-tax profits were down to £152.7 million in the year to March 31 as the firm was hit by a 50 per cent increase in energy prices.

Overall demand for water and sewerage was down 1 per cent, but industrial and commercial customers cut volumes by around 4 per cent.

Managing director John Cuthbert said: "The group has produced good financial and operating results against a difficult economic background.

"Energy prices continue to be volatile and, despite managed reductions in demand, have increased operating costs in the year."