Energy Group threatens regulator

Energy Group has threatened to take the electricity watchdog to the Monopolies and Mergers Commission unless it lets the company charge household customers more than it currently will be allowed to when the market is opened to competition next year.

Stephen Littlechild, Director- General of Electricity Supply, has tentatively ruled that Energy Group's electricity distribution company, Eastern Group, will have to cut bills to households by between 7.2 per cent and 9.7 per cent from April next year.

The cuts were contained in Professor Littlechild's consultation paper published two months ago, in which he called for average cuts across the electricity supply industry of up to 10 per cent. He said average domestic bills would fall by about pounds 27 from April.

Eastern, which with 3 million customers is the UK's largest electricity supplier, complains that the new pricing regime is unfair. The company says Professor Littlechild's new pricing fails to take account of the volatility of small electricity users' demands, and that this volatility makes costs higher for it than for companies supplying electricity to big business.

Paul Marsh, Eastern's finance director, said the company "would certainly consider" asking Professor Littlechild to refer the issue to the Monopolies and Mergers Commission, should the regulator not modify his position. He declined to say how much the regulator would have to satisfy Eastern.

Mr Marsh's comments are the first public criticism of Professor Littlechild's proposals, which were seen by the industry as being less arduous than earlier papers.

Analysts like Nigel Hawkins at Yamaichi International are doubtful that any of the companies have the stomach to take the issue to the MMC.

"Any regional electricity company that puts its head above the parapet and risks delaying competition in 1998 isn't going to endear itself to the current government," he said.

Eastern's standard domestic tariff is about pounds 267 a year, about average for the UK. Of that amount pounds 199 accounts for the cost of purchasing and of running the supply business. On that basis it is the most expensive of the regional electricity companies, costing pounds 32 more than Norweb, the cheapest.

A spokeswoman for the Office of Electricity Regulation, said Professor Littlechild will give his definitive ruling on price caps in mid-October. She said he is listening to comments companies have made since the last paper.

However "the Director-General has done a lot of thinking on this, and these are the figures he's come up with," she said.

Mr Marsh explained that Eastern disagrees, in particular, with the regulator's assumptions on what the price of coal will be after contracts with companies supplying coal to the electricity generators expire next year.

Professor Littlechild has said the price of coal for generators next year will fall by between 12 per cent and 25 per cent.

Mr Marsh counters that the price of coal is likely to be volatile, and price caps based on assumptions about a stable and declining coal price are unfair.

"The caps are too tight to deal with that level of risk [for suppliers]," he said

In April, when Britain moves to a fully competitive market, 23 million domestic electricity users will begin to be able to choose their electricity provider, regardless of where they live.

News
Mickey Rourke celebrates his victory against opponent Elliot Seymour
people
News
Gordon and Tana Ramsay arrive at the High Court, London
newsTV chef gives evidence against his father-in-law in court case
News
Actor Burt Reynolds last year
people
News
people

Watch the spoof Thanksgiving segment filmed for Live!
PROMOTED VIDEO
News
The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
books
News
i100 Charity collates series of videos that show acts of kindness to animals
News
ebooksNow available in paperback
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

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game