Littlechild urged to stand firm on electricity cuts

Professor Stephen Littlechild, the electricity industry regulator, was yesterday urged to stand firm over his bid to slash electricity prices by more than pounds 30 a customer, despite intense pressure from suppliers to scrap his latest proposals.

The Electricity Consumers' Committees insisted the plans for a cap on bills was the only way to guarantee benefits to customers when domestic competition starts from next April.

Professor Littlechild has already proposed maximum tariffs for regional electricity companies (RECs) for the first time, compared with the current price regime where higher generating costs can be passed through to bills.

He has that estimated the move would cut average bills by 12 per cent next year, to pounds 238 excluding VAT.

Yvonne Constance, chairman of the ECC, said the new system would mean RECs would "be forced to negotiate hard with the generators to win the lowest prices for those consumers who do not switch to new suppliers". She added that the maximum tariff was "the only way to achieve this key purpose."

The regulator will reveal the latest proposals for electricity supply price controls tomorrow. The final plans are due to be published on 22 September, giving the companies until 27 October to accept or reject the controls.

Some RECS have already warned Professor Littlechild and John Battle, the industry minister, that they could take the issue to the Monopolies and Mergers Commission. They claimed their profit margins on electricity supply, the element of bills being opened to competition, would plunge into losses of up to pounds 50m for each REC.