Southern Electric promises price cuts in water bid battle

Southern Electric yesterday promised price cuts of around pounds 10 a year to customers of Southern Water if its pounds 1.6bn bid for the water supplier is successful. The offer to ameliorate price increases by up to 4 per cent of over the next three years compares with a 3 per cent reduction over two years being offered by rival bidder Scottish Power.

Southern Electric, which also announced it was cutting bills for its own customers by 4 per cent, said it hoped the reductions would set its deal "on the start of the road to clearance" by the water regulator, Ofwat. Henry Casley, chief executive, said: "We are not counting any chickens as far as this is concerned. We are optimistic, but not complacent. We will continue the dialogue with the regulator and with the Department of Trade and Industry and hope that leads to eventual clearance."

Scottish Power dismissed the move, which accompanied the publication of Southern Electric's offer document. A spokesman for the Glasgow-based group said: "This document shows Southern Electric's concerns about the competition we will bring to the region. We recognise the importance of a customer dividend. It is interesting to note they are following our lead."

Southern Water is already committed to raising its bills by 1 percentage point less than than the 8 per cent over inflation allowed this year by the regulator. The REC says it will continue the water company's policy of keeping prices below the permitted level, cutting 4 points off the 20 per cent allowed above inflation by 1999.

Southern chairman Geoffrey Wilson claimed in a letter to Southern Water shareholders that the electricity company's bills had fallen by nearly 13 per cent over the past five years, equivalent to a saving of pounds 40.

The documents show that directors of Southern Electric made substantial option profits in January, with Mr Casley leading the way with a paper profit of nearly pounds 195,000 on the exercise at 446p. He subsequently sold half the resulting shares at 898p.

The bid of pounds 6,311.24 in cash plus 526 new Southern Electric shares values Southern Water shares at pounds 10.02, a 5.9 per cent premium over Scottish Power's competing offer, the documents claim.

The news came as London Electricity chairman Sir Bob Reid issued a warning that any extra taxation on utilities imposed by a Labour government could hit much-needed investment. Threats of a windfall tax did not contribute to the stable fiscal environment required to ensure the steady flow of funds to finance investment, he said.

London announced pre-tax profits of pounds 276m for the year to March, up from pounds 172m before. But stripping out the holding in the National Grid, distributed as a dividend to shareholders last year, and exceptional items, underlying profits were down 5.5 per cent to pounds 183m and disappointed analysts.

Sales of electricity rose 5.2 per cent last year, reflecting signs of revival in the capital's economy, the group said. The improvement has continued into the first part of the current year, with sales increasing by more than 5 per cent.

London has made a pounds 4.5m provision to cover the effect of highly priced North Sea supply contracts on its joint venture gas operation with the French oil group Total.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there