water: and then there was one...
WORKERS, MARCH 2003 ISSUE
THE MOVE TOWARDS one single water company in Britain, irrespective of the protests from the regulator and government, looks set to continue with another round of de-mergers, take-overs and consolidation of business interests.
Northumberland Water is about to be sold off by Suez, its French owner, with a £2.2 billion price tag for 2,200 staff, 4.4 million customers and profits of £92.4 million last year. Southern Water, which was recently acquired by another French-owned company, Vivendi, is likely to be cleared for merger or re-offered for sale by mid-February. Wessex Water has now been bought by the Malaysian company YTL, while a frustrated Royal Bank of Scotland, which lost out in the bidding war, is sniffing round for other possible acquisitions. Meanwhile the bankers West LB have bid £900 million for the Anglian Water Group.
The water industry has gone through the same process that the electricity industry is still undergoing. Price regulation has stopped the owners effectively printing money and they have slashed staffing costs to the bone. Now the companies no longer generate attractive profits they are being returned to the market to be snapped up by the banks or bigger multi-national utilities companies. A few more mergers and take-overs and the dangers of one company holding a virtual monopoly over water in the UK or even the EU could move from a possibility to a probability.
In another utility – electricity – concentration continues. In 2000, Eastern Electricity bought NorWeb electricity. In 2001 TXU Energi bought Eastern Electricity. As the number of companies reduces, so regional identities are lost, headquarters are closed, shop chains are shunted off and billing arrangements can be anywhere in Britain. Multi-national companies have swallowed the small fry.
Now Powergen, owned by Eon, the German utilities giant, has bought TXU Energi from its near bankrupt Texan parent company amid the continuing fallout from the Enron scandal. This means the company has established a market share in the UK of around 40%. Powergen immediately announced a cut of 1,000 jobs in TXU Energi, effectively closing down the old Eastern Electricity Company base in Ipswich and East Anglia. They also intend to close two coal-fired power stations and ship all their call centre work to India. 4,000 jobs may be cut in Britain, with 400 lower-paid jobs to be created in India.