Centrica wins BT power contract

BT HAS awarded an electricity contract worth hundreds of millions of pounds to Centrica, the power company that is also its bitter rival in the consumer phones market.

BT used to buy all its power, up to £200m a year, from nPower, but Centrica will supply part of it for the next three years.

The move will save some money, but is largely aimed at increasing the amount of clean energy BT uses, allowing it to claim tax credits. By 2010, the company hopes its emissions of carbon dioxide will be a quarter of the 1996 level.

The move comes as BT's demand for power is soaring. Paul Reynolds, head of BT Wholesale, which runs the firm's huge network, said: 'Lots of new services means more power. We are spending a lot on efficiency - £675,000 last year - which is keepingthe increase in demand down so far, but the company is now one of the biggest energy users in the country.

'We are a sophisticated consumer. We buy energy on the spot market and the futures market and we also have some generators of our own that we use at peak times to reduce our need for the most expensive electricity.'

Last year's spending cut consumption by 1.5%, he said.

Hugh Conway, chairman of the electricity group at industry body the Major Energy Users' Council, said: 'BT is not yet challenging the consumption of big intensive processes such as steel or cement making, but the digital economy's demands are growing exponentially.'

VODAFONE has started negotiations with US partner Verizon Communications over future earnings from its 45% stake in Verizon Wireless.

A deal to pay a proportion of earnings as dividends expires this year and Vodafone is now in a period where it can exercise an option to sell down its stake.

City sources say Vodafone is hoping to receive shares in the two companies' Italian joint venture instead of cash.