Nuclear plans under attack

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The Independent Online

Industrial Correspondent

Government proposals to merge Scottish Nuclear with Nuclear Electric have been savaged by a leading consultant on the electricity industry. Dieter Helm, a fellow in economics at New College Oxford, said the move would be "a significant reversal in the promotion of competition in the British energy market".

Dr Helm's attack came as Scottish Nuclear's management and workers descended on London in a last-ditch lobbying effort against the plan. Fifty managers paid £1,000 each to fund a "battle bus", which brought the protestors from Scotland to London to express their views.

The merger is being considered as a precursor to privatisation of the companies, raising an estimated £3bn. Dr Helm argues that managerial competition between the two companies has probably increased efficiency. He also rejects Nuclear Electric's claim that a merger - vehemently opposed by Scottish Nuclear - would help the industry to expand overseas.

Dr Helm said that the merger would have "dubious" benefits, would be against the wishes of the industry regulator, Offer, and would create competition problems.

"A merged nuclear company is much more likely to find itself - rightly - at the Monopolies and Mergers Commission. This may come as early as 1996 and therefore scupper the privatisation timetable. The Government would be better advised to retreat now and return to its competitive principles," he said.

Dr Robin Jeffrey, chief executive of Scottish Nuclear, said momentum was growing against the merger, which he believes may be on the agenda at the Cabinet meeting tomorrow. The company is believed to have had several contacts with the Scottish Office and the Treasury over the past week or two.

Scottish Nuclear, which has two advanced gas-cooled reactors, has abandoned earlier attempts to persuade the Government to give it two of Nuclear Electric's five AGRs. As Nuclear Electric also has the Sizewell B pressurised water reactor, this would have left each company with four stations. The Scottish firm now wants to be privatised as it stands.