Corus accuses utilities of electricity rebate scam

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The Independent Online

Corus, Britain's largest steel maker, believes it is being ripped off by electricity companies, which it accuses of "working the system for their own financial advantage".

The claims are contained in a damning letter to the energy regulator, Ofgem, which accuses electricity generators of failing to pass on hefty rebates to consumers.

Corus, headed by chief executive Philippe Varin, is one of the country's largest electricity consumers, with an annual bill of £80m-£90m. The allegations centre on payments between electricity distributors and generators. Corus says that some distributors deliberately set high tariffs and, at the end of the year, make a rebate to generators. "Distribution companies are gaining an unfair financial advantage from interest earned on money which rightfully belongs to end consumers," says Corus. It also alleges that suppliers are failing to pass on these rebates to consumers, a practice it finds "deeply disturbing".

While it is not against the regulations for distributors to make rebates, the identity of the companies is kept secret. "We continue to be in the dark as to the extent we have been a victim of this practice," says Corus, which urges Ofgem to publish a list of the companies involved.

But The Independent on Sunday can disclose that these companies include Western Power Distribution, Yorkshire Electricity, Northern Electric, Aquila, East Midlands Electricity and United Utilities.

Ofgem says the value of rebates between April 2000 and March 2003 was £90m. The regulator is due to make a ruling next month.

The regulator said it was "concerned that most customers do not appear to benefit from the rebates", and that several distribution companies have persistently overcharged and later paid rebates.