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Offer admits systems not ready for competition

Regional electricity companies may have to ditch their costly computer systems and return to carrying out transactions by hand to meet next year's timetable for domestic competition, the industry regulatory revealed yesterday.

Professor Stephen Littlechild also admitted for the first time that his original pounds 250m estimate for the cost of introducing competition could be much too low, which could mean higher bills for customers.

In the latest embarrassing disclosure about the progress towards competition, Professor Littlechild said his department, Offer, was working on several contingency plans if the regional power suppliers (RECs) failed to complete ambitious software projects. The industry is investing hundreds of millions of pounds in computer systems which talk to each other, enabling the RECs to log where customers move to when they switch suppliers.

Professor Littlechild insisted to MPs at the Commons Trade and Industry Select Committee that competition would not end in the kind of problems which hit the commercial market in 1994. "Competition will take place and there won't be chaos," he promised.

However, in order to meet the six-month timetable, which would introduce competition nationwide using postal codes between April and September next year, suppliers may have to resort to some unorthodox ways of arranging customer transfers. "We're talking of manual systems to enable customers to change suppliers ... It won't be as cheap," he explained.

The most likely contingency plan was for customers who switched to receive bills from the new company, which would then settle up the cost behind the scenes in a temporary contract with the local REC.

"It's a sensible thing to have this fall-back position but it's an undesirable situation to be in. We hope it won't happen," said Tony Boorman, Offer's head of competition. "We're not talking about going back to the quill pen here. It's just that some of the companies may have to go back to their old computer systems."

One REC, Sweb, said last week it had postponed a pounds 35m customer computer project until 2000, blaming problems with introducing competition. Offer has appointed the PA Consulting group to manage the process, but many RECs privately say the timetable is ridiculously tight.