The regulator has been in prolonged negotiations with the generators over electricity prices and the need for more competition in the generating market. Professor Littlechild, who had hoped to announce his decision by the middle of last month, believes that National Power and PowerGen have too much influence on prices in the electricity trading pool.
The companies have objected to demands by the regulator that they sell off plants to make way for more competition in generation. National Power has taken a strong stance on this issue, saying that it cannot be forced into 'distress' sales.
The length of time taken in discussions has increased speculation that all three parties are willing to compromise. An MMC reference would put paid to government plans to sell all or part of its 40 per cent stake in each of the generators in the near future, raising up to pounds 4bn.
Professor Littlechild has said that he would not rule out a reference of one company without the other, although analysts say that any MMC investigation in practice would have to cover the whole industry. National Power's shares fell by 12p to 461p. PowerGen fell by 17p to 525p.