Gas-fired power ban could add 5% to electricity bills

CONSUMERS COULD face a rise in electricity bills of at least 5 per cent if the Government extends its current ban on new gas-fired power stations, the industry watchdog warned yesterday.

The director general of the electricity regulator Offer, Professor Stephen Littlechild, said the ban would prevent new companies from entering the generation market and would make it easier for existing players to maintain higher prices.

Mr Littlechild said that competitive pressure was expected to reduce wholesale electricity prices by at least 10 per cent over the next five years. Around half of this saving would be passed on to customers in the form of lower bills.

But consumers would miss out on these price reductions if the Government's energy review, due to be published shortly, extended the present moratorium on gas-fired plants beyond its June deadline, he said.

There has been speculation that the Government could call a halt to the construction of such stations in an attempt to boost Britain's ailing coal industry.

"There is a danger that the moratorium could keep prices higher than they otherwise should be," Mr Littlechild said at the launch of Offer's annual report.

The regulator said that he might ask large generators such as National Power and PowerGen to sell some of their power stations to increase competition and push down prices. He did not rule out a referral to the Monopolies and Mergers Commission to force generators to shed capacity.

Offer's annual report showed that complaints to London Electricity, the capital's power distributor, doubled during 1997 and reached their highest level since 1992.

The increase in complaints almost cost the company the Charter Mark, the Government's award for firms with excellent standards of service, the report revealed.

London Electricity, owned by Entergy of the US, managed to retain the mark only after an inquiry concluded that it had taken remedial action and that complaints were falling in the first part of this year.

The company blamed the problem on a reorganisation of its customer services and said that complaints in the first five months of the year were down by 12 per cent over the same period a year ago.

Seeboard registered a 49 per cent increase in complaints, while Scottish Power saw the number of disgruntled customers rise by 42 per cent.

However, the overall level of complaints fell 6 per cent in 1997 to 6,622. The average domestic bill was down by around pounds 15 to pounds 255 a year, the report said.

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