Seeboard unveils pounds 120m rebate

The power industry is angered by one board's move to cut bills and increase dividend payments

Seeboard, the South-east of England electricity company, surprised the industry yesterday with a pounds 120m package of handouts for customers and shareholders over the next four years.

From October, households will see their standing charges cut by 25 per cent, equivalent to a reduction of about pounds 8.30 on a typical annual bill. This, with price cuts for businesses from next April, will cost pounds 20m a year.

The move follows the announcement by Anglian Water on Monday of a rebate of up to pounds 6 per customer at a cost of pounds 12m. But Thames Water yesterday said no rebate was needed as its charges are amongst the lowest in the country.

City analysts said Seeboard's rebate had angered other electricity companies, which may now feel pressure to follow suit. The company rejected allegations that it was trying to pre-empt a review of electricity distribution prices by Offer, the electricity regulator, which is within weeks of announcing new controls on bills.

Seeboard declined to comment on how much it would accept in price cuts by Offer above the measures revealed yesterday. But it warned that if Offer's new regime favoured some regional companies over others, it may go to the Monopolies and Mergers Commission.

Seeboard's package includes an extra 4p dividend for shareholders in each of the next four years, costing pounds 10m a year. The company is also promising a one-off payment of pounds 25 per customer in the event of the sale of the National Grid Company - expected later this year - which is owned by the 12 regional electricity firms.

Sir Keith Stuart, Seeboard's chairman, said the package was made possible by past efficiency gains. The company has cut 2,000 jobs since privatisation and up to 450 more will go over the next three years, Sir Keith said.

"Taking all these measures into account, together with the action Seeboard has taken in previous years to reduce prices, there can be no doubt that our customers have gained real benefits from the privatisation of the industry and our improved efficiency."

He was speaking as Seeboard announced an 18 per cent increase in underlying pre-tax profits to pounds 154.8m in the year to 31 March before charging pounds 12.8m for repurchase of Government debt. Dividends rose by 23 per cent to 14.5p and underlying earnings per share increased by 23 per cent to 46.6p.

The company also revealed plans to seek power at the annual general meeting to buy back up to 14.7 per cent of its shares in addition to the 5.3 per cent purchased in 1994-95.

Seeboard has already said it will use the AGM to seek to change the articles of association which prohibit any shareholder owning 15 per cent or more of the stock.

The articles can be changed following the expiry of the Government's golden share in March.

Sir Keith also said that any share options awarded to directors in future would be exercisable only if the company's share price performance was maintained in the top third of the 12 regional firms for three years and the price for domestic customers was consistently in the lowest third. Sir Keith pointed out that Seeboard pays no bonuses.

Separately, Nuclear Electric said yesterday the Government's plans to sell a large part of the nuclear industry next summer were "just about feasible". The company said it trimmed losses to pounds 33m last year from pounds 401m in the previous year. With the help of the nuclear subsidy, raised through a levy on electricity bills, the company improved operating profit by 53 per cent to pounds 1.2bn. What it means for customers and investors For 1.95 million domestic customers pounds 8.36 a year For 200,000 small shareholders with pounds 8 a year an average of 200 shares each