Inquiry sought into sale of National Grid

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The Independent Online
Richard Caborn, chairman of the Commons Trade and Industry Select Committee, has called for a Department of Trade and Industry inquiry into the planned sale of the National Grid Company.

The NGC, which transmits electricity throughout the country, was given to the 12 privatised regional electricity companies and is now worth about pounds 4bn. The companies are expected to decide within weeks whether to float the grid company on the stock market or demerge it in an attempt to lessen the tax impact, which could be as high as pounds 1bn.

In a letter to Michael Heseltine, President of the Board of Trade, Mr Caborn said that sale of the NGC could damage the efficiency and security of the transmission system and create instability in the electricity market.

He asked whether the independence of the NGC would be compromised and whether the limit on any regional company owning more than 15 per cent of the shares would be extended to future owners.

He also argued that a sale could offer a very poor deal to the ordinary consumer and asked if individuals might be allowed to benefit through a rebate on their electricity bills or a reduction in charges.

'As you know, the regional electricity companies were given their shareholdings in the company free and it seems absurd that four years after privatisation they should be able to benefit from such a windfall,' he said.

The issue of the NGC sale is becoming increasingly embarrassing for the Government, which is thought to be putting pressure on the regional companies to find a way of sharing any gains with customers.

Adverse publicity over plans for a sale could reflect badly on the entire electricity industry. Industry sources say it could cast a shadow over the Goverment's planned sale of its remaining 40 per cent stake in National Power and PowerGen in February, which could raise about pounds 4bn.

Replying to Mr Caborn, Mr Heseltine said the Government was committed to the operational independence of the NGC. But Mr Caborn said many questions remained. He now intends to seek the views of the industry regulator, Offer.

Mr Heseltine said he had passed a copy of Mr Caborn's letter to Professor Stephen Littlechild, director-general of Offer, who would need to look at regulatory aspects of any change in ownership of the NGC.

Separately, there is growing speculation over the implications for Energis, the telecommunications arm of the National Grid Company. Energis recently launched into the long-distance telephone market and is regarded as a serious rival to BT and Mercury Communications. Energis is thought to be worth pounds 600m or more in its own right.