Electricity consumer groups call for price cut

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The Independent Online
BRITAIN'S 14 Electricity Consumer Committees have called for price cuts of about 9 per cent to offset the impact of full VAT on fuel bills in April 1995.

The chairmen of the committees, set up under the Electricity Act, have asked the regulator, Offer, to help implement the cuts through new electricity price controls, likely to be announced next week and to take effect in April 1995.

Peter Weston, spokesman for the chairmen, says electricity prices have fallen 7 per cent in real terms over the past two years - not enough.

'Most of the benefits of privatisation have been enjoyed by investors. For the benefit of the non-investing consumer in particular, it is important that they (price reductions) come into effect before VAT rises further to 17.5 per cent in April 1995.'

Professor Stephen Littlechild is expected to impose a one-off cut in distribution prices of between 10 and 20 per cent, to take effect next April. Thereafter, annual price increases will be set at inflation, less a factor called 'X', which analysts believe will average two or three percentage points. Electricity firms now can increase distribution prices by inflation plus about one percentage point.

The cuts will affect electricity companies' profits and, according to some analysts, will result in thousands of job losses, while the benefit to consumers will be limited. Distribution charges account for only about 25 per cent of the average household bill.