Professor Stephen Littlechild, director-general of electricity supply, says the cap will save customers pounds 500m over two years. Nuclear Electric believes it will account for as much as half of these price cuts. It says that the cap amounts to 'collusion' between the regulator and National Power and PowerGen.
The price cap was the result of an investigation by Professor Littlechild into the market power of National Power and PowerGen, which did not cover Nuclear Electric. Coupled with a requirement that National Power and PowerGen sell about six large power stations, the cap was introduced as an alternative to referring the two generators to the Monoplies and Mergers Commission.
John Collier, Nuclear Electric chairman, raised the issue last week in a meeting with Michael Heseltine, President of the Board of Trade. He is angry that the company was neither consulted nor warned about the strategy, which will cut electricity pool prices by 7 per cent for the next two years from an October 1993 base.
Mr Collier said keeping to the price cap would mean regular meetings between the two generators and the regulator. 'He will collude with them and with no one else. This is discrimination in the marketplace,' he said.
'Professor Littlechild made it clear that we are not part of the problem he was addressing, which was the ability of National Power and PowerGen to push prices up.
'You have to generate a lot of extra electricity to make up pounds 250m,' he said.
Mr Collier, who is keen for Nuclear Electric to be privatised, said the company's lawyers were considering what action might be taken. He is also seeking clarificaton from the watchdog body, Offer, on what exactly the price cap will mean.
Nuclear Electric's exposure to prices in the pool is much greater than that of the other generators, whose sales are largely covered by contracts.
The state-owned company has 25 per cent of the electricity generating market in England and Wales, compared with 16 per cent a few years ago.Reuse content