Many in the City were shocked and there was talk that institutional shareholders were so incensed they were considering legal action against the Government.
The market was talking about a Whitehall "double-cross" as about £3.5bn was wiped off the value of the electricity sector as prices collapsed by more than 100p.
The electricity turmoil not only hit the big institutions and the professional investors but also the 1 million small investors who were enticed into the final generators sell-off by promises of high dividends.
It was thought that some overseas institutions, which subscribed for shares, were threatening to withhold payment. If they do it would be a savage blow for London investment houses that represented them. They would be forced to cover the cost of their default.
The Government tried desperately to distance itself from the Littlechild rethink but the damage had already been done.
It is widely suspected that at least the direction of the regulator's revised approach, prompted by the battle for Northern Electric, was known to the Government last week. On Friday the allocation for private investors of the issue was increased from 40 to 60 per cent.
At one time NP shares, sold through share shops at 170p, were down to 163.5p; they closed at 176.5p. PG, offered at 185p, fell to 181p and closed at 189.5p. Seaq put turnover at a remarkable 50 million shares. The fuse was also pulled on the fully-paid. The partly-paid shares are still above the share shop price but below the level institutions paid.
The deepest despair was among the electricitiy companies which have surged ahead since the last Littlechild review, greeted in the market as unexpectedly soft, and the subsequent outbreak of takeover speculation that crystallised in the hostile Trafalgar House bid for Northern Electric.
But the stench of burnt flesh greeted yesterday's regulatory statement. There was talk of huge setbacks being suffered with some investment houses, deeply involved in electricities, suffering near-terminal losses.
Among the big, powerful players, Swiss Bank Corporation could be sitting uncomfortably. It is advising Trafalgar and, controversially, its fee is linked to the share prices of Northern and some other electricity shares. Although its ploy has been hedged it looks rather less attractive than when hostilities commenced.
Trading in electricity stocks were confused, often frantic. Backwardations, when in theory a share is cheaper to buy than sell, littered the sector as market-makers attempted to deal with the sudden, outraged rush of sellers.
Only one electricity share managed to restrain its fall to double figures; Seeboard lost a mere 67p to 362p. Northern crashed 158p to 897p. It has, in view of the Littlechild intervention, decided to recommend Trafalgar's 1,100p offer which closes on Friday. However, there is speculation Trafalgar, off 4.5p to 58.5p, may seek to postpone its bid until the impact of the expected tighter controls is clear.
Yorkshire, a rumoured Hanson target, fell 180p to 664p. Other ton-up fallers included East Midland, 155p to 596p; London 122p to 608p and Southern 122p to 603p.
Worst performer was South West Electricity, at one time down 204p. It closed at 629p, off 183p.
The electrical turmoil spilt onto the water pitch where shares had bubbled merrily on the signalled French bid for Northumbrian Water.
Welsh Water dipped 32p to 605p and Wessex 17p to 267p. Northumbrian, up 128p on Monday, was lowered 28p to 842p.
An attempt by Ofwat, the water regulator, to calm fears it would indulge in a similar pricing review made only a limited impression.
Elsewhere, Glaxo touched 687p as target Wellcome capitulated. It closed at 667, up 19p. Wellcome fell 9p to 1,027p and Zeneca, expressing relief it had not been tempted to mount a counter-offer, rose 14p to 878p.
The electrical storm was only one factor behind another poor market display. Currency turmoil again did considerable damage, leaving the FT-SE 100 index down 24.9 points to 2,977.0, lowest for six weeks. The supporting FT-SE 250 index, covering most of the electrical shares, tumbled 66.8 to 3,327.9.
With the dollar and sterling weak, hitting new lows against the mark, the fear of higher interest rates gripped sentiment. Government stocks suffered falls of up to one-and-a-half points.
Da La Rue, the security printer which took over Portals, the speciality paper group, was a casualty, falling 143p to 889p. The slump followed a cautious trading statement that cast doubts on the group's high-flying rating. Borthwicks, the colourings group, was another hit by an uninspiring trading statement, down 9p at 33.5p. But Provident Financial, the credit group, rose 7p to 545p, helped by plans to undertake a 10 per cent share buy-back.
Alvis, the defence group, continued to advance, gaining 8p to 69p. The shares have risen from 46p on Thursday when a sharp increase in orders was revealed.
Kalon, the paint maker, was another in form, up 33.5p to 139p after it announced plans to merge with Euridep.
Sir Fred Pontin, the 89-year-old holiday camp pioneer, has sold most of his remaining 19 per cent shareholding in Farringford, a modest hotel company regarded as a shell. The group has a number of shareholders jockeying for position including Trevor Hemming of Scottish & Newcastle. Sir Fred's stake has gone to an unknown group, Jafis International. The shares are 5.5p.
Bensons Crisps, the struggling snack food group, remained stuck at 16p. Knox D'Arcy, the management group which arranged a rescue rights issue, emerged as an 8.73 per cent shareholder. Another in the Bensons' bag is Nicholas Berry, whose Stancroft group has lifted its interest to 10.3 per cent by buying the shareholding of the Arlen electrical group.Reuse content