Computer problems blamed for delay in electricity competition

The electricity watchdog, Offer, has warned that competition in the domestic power industry may not start on time in April. Chris Godsmark, Business Correspondent, finds that one of the UK's most costly and complex computer projects is to blame for the delay.

Tony Boorman, the head of competition at Offer, gave the clearest warning yet that electricity competition would not begin on time next April. In an interview with The Independent, he said: "I don't know what the date will be. April looks increasingly difficult." It follows a private warning by Professor Stephen Littlechild, the regulator, to industry executives earlier this month, that the deadline was looking "difficult to achieve".

Declining to suggest a new start date, Mr Boorman, said it would depend on a review by PA Consulting, the programme manager monitoring the project. The consultants are due to produce a report on the timing around 20 January.

"Quite honestly we're considering all the options for a timely opening of the market. When that will be I don't know," said Mr Boorman. "It'll happen some time in 1998. But it's important to have a date we can deliver ... A six-month delay would have to assume that the design the industry agreed had gone seriously wrong and we'd have to go through the whole loop again."

The original plan was for competition to start for all 23 million power consumers in a big bang in April 1998, but Professor Littlechild agreed to phase the introduction over six months to allow slower regional electricity companies to catch up. This timetable would see four RECs, Eastern, Seeboard, Yorkshire and Manweb, able to poach customers in each other's regions from April, with other companies not joining competition until September.

The problems surround a new version of the so-called "baseline", which outlines all the computer standards and procedures involved in competition. The new industry standard, called "baseline 2," was delayed from October to 12 December and has required many RECs to look again at their systems.

The main problem was the difference in data produced by each of the RECs. Data from the 14 companies involved, including the two Scottish power groups, should be in the same format, but most systems have evolved different software.

Mr Boorman admitted that "the extent of some of the changes was greater than some had hoped". He went on: "The indications are that it will take longer than we'd expected. It critically depends on what the RECs say."

The chief executive of one REC, which had been readier than most to begin competition, said he now believed a six month delay was "inevitable".