Midlands Electricity plans to cut 1,200 jobs

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The Independent Online
MIDLANDS Electricity, one of the 12 regional electricity companies in England and Wales, will shed 1,200 jobs - 20 per cent of its workforce - over three years.

The cuts are in addition to 900 jobs shed in the past three years and follow the announcement last month by Offer, the industry regulator, of new controls on electricity distribution prices.

Manweb this week announced it was axing 500 jobs, about a fifth of its workforce, and Norweb will cut 1,200. Analysts say thousands more job losses will emerge in coming weeks.

Mike Hughes, chief executive of Midlands Electricity, said the changes in staff numbers and reorganisation would result in annual savings of pounds 30m. Midlands' six operating divisions would be reduced to four and there would be changes at the company's headquarters.

'The need for continuing cost reduction has been underlined by the new distribution price control formula,' Mr Hughes said. 'The measures we have announced will enable us to reduce controllable costs by a further 20 per cent while continuing to improve customer service and maintaining high level of investment in our network.'

The company would be able to increase dividends in real terms each year to the end of the decade.

City analysts believe all 12 companies will achieve real dividend increases of 6-8 per cent in spite of the new controls.

The Offer formula will cap electricity distribution prices at inflation minus two percentage points from next April, following an initial price cut of between 11 and 17 per cent. The effect on household electricity bills will be much less marked. Distribution accounts for only 25 per cent of the overall charge.