North West Water poised to step up Norweb fight

Utilities: Regulator champions consumers with demand for companies to open accounts

North West Water is poised to launch a second renewed offer for the electricity firm Norweb, worth up to pounds 12 per share if tax credits are taken into account. The water firm, which yesterday raised pounds 140m through a rights issue and share placing, is thought to be considering adding a special dividend of about 50p to its existing offer of pounds 10.75, or just over pounds 11 in cash and shares.

North West, which is fighting Texas Energy Partners of the US for control of Norweb, declined to comment on whether or how much it might bid. But City analysts believe the offer of an extra 50p special dividend - which for some shareholders would carry a tax credit of 12.5p - will come by the end of this week.

The battle for Norweb intensified last week, when Texas launched an increased offer of pounds 10.85 per share, valuing Norweb at pounds 1.74bn. Texas, a partnership between Houston Industries and Central and South West Corporation, also made it clear it was prepared to consider another counter attack. Texas, which has yet to issue its offer document, has said North West's bid is overshadowed by regulatory risks and by the water firm's lack of experience in the electricity industry.

Speculation over North West's next move intensified as Ofwat, the water industry watchdog, called on companies to explain dividend payouts to the public and to share any benefits from increased efficiencies equally between customers and shareholders.

Ian Byatt, director general of Ofwat, said his concern is fuelled by the steady diversification of the companies away from the core water and sewage businesses and by the potential for takeovers in the utility sector, including the bid by North West Water for Norweb.

He said customers should be told how much of the dividends paid to shareholders come from the water and sewage services they pay for.

Mr Byatt said: "Accounts are not simply for the City. The water companies should explain to their customers and to the public generally what returns they have made in the regulated water businesses and what they intend to do with them. There is inadequate debate on the profits made in the regulated business, the trends in its costs or on its financial returns."

Mr Byatt added: "You are probably going to see more utilities becoming part of a larger group and regulators will want to see the regulated business deliver what it ought to within its pricing limits. We also want to see that there is no cross-subsidy, either in a financial sense or in transfer of goods and services within a parent group.They already have to account to me for the basis of their dividends. What I want now is for the companies to explain to the public what is going on." He demanded they start with the interim reporting season, which begins with Thames Water's half-year results on 31 October.

A City analyst said: "This is a veiled threat to the companies not to announce big dividend increases unless they can prove that they are covered by the non-core parts of the operation. He does not want to see big payouts at a time of particular sensitivity [among the utilities]. For the last five years the shareholders have benefitted at the expense of customers. Now he is trying to redress the balance."

Suggested Topics
News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
ebooksAn unforgettable anthology of contemporary reportage
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering