London in airport electricity deal

LONDON ELECTRICITY plans to take over the electricity distribution networks at Heathrow, Gatwick and Stansted airports. A deal with BAA, which owns the airports, is expected next month.

London said yesterday that the deal would be worth 'tens of millions of pounds', representing the privatised utility's biggest acquisition to date. 'The three airports use as much electricity as a city like Cambridge, so this is quite a sizeable undertaking'.

A spokesman at BAA said: 'We own the wires and other electrical infrastructure for historical reasons but intend to stick to our core business, which is running airports.'

Under the proposed deal London would only own the wires through which electricity at the airports passes. BAA has separate supply agreements with Southern Electricity, Seeboard and Eastern Electricity, which are not affected by the negotiations.

Like other water and electricity companies, London is keen to increase its exposure to unregulated businesses. It already has environmental, gas and retailing operations, although the future of its high street shops is under review.

Southern Electric announced an across-the-board 2.9 per cent pay deal for its 5,000 staff and claimed that the end of national bargaining could save it pounds 15m a year in salary costs.

Included in the package is a move towards flexible working hours and the end of demarcation between engineers, clerical staff and industrial workers.

The chairman, Duncan Ross, said: 'This is a radical change in working practices which have held sway for the last 40 years.'

The savings represent 12 per cent of Southern's annual wage bill.