Offer was told that formula might leak

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The Independent Online
A row has erupted between the Stock Exchange and the electricity regulator, Offer, over the alleged leak of a new price-cut formula into the stock market on Thursday, with a resulting surge in shares.

The leak forced Professor Stephen Littlechild, director-general of Offer, to bring forward from Friday morning his plans to cut electricity bills by pounds 1.25bn over four years.

Both sides claim to have done the right thing.

The Stock Exchange said it had warned Professor Littlechild that his decision to make the price changes known to the companies 24 hours early could result in a leak.

But the regulator insisted that the early release of information "as a courtesy" to the chief executives of the 12 regional companies was "a procedure which was agreed some time ago" with the exchange.

Michael Lawrence, chief executive of the Stock Exchange, said: "There were discussions between us and Offer on Wednesday of this week when they indicated they would be releasing copies 24 hours in advance. We actually said that worried us. We said to release so far in advance gave us cause for concern."

Speaking on the BBC's World at One, Mr Lawrence also confirmed that the Stock Exchange was investigating the leak It also emerged that Offer had been warned in the past of his fear that giving the companies a day's notice of decisions could cause disorder in the marketplace.

Labour's trade spokesman, Brian Wilson, called on the Government to order all regulators to cease the practice of making sensitive information available in advance.

Mr Wilson said: "It is bizarre that, in the name of courtesy, this highly sensitive information should be issued in advance to those most directly affected. The idea that they need 24 hours to prepare their responses is naive to say the least. In this case there has been massive abuse which has allowed fortunes to be made on the back of the regulator's action. That is not just a matter for the Stock Exchange, but also for the Government, which appoints the regulators."

The Department of Trade and Industry, which is also understood to have had advance notice of the new price controls, declined to comment on who within the department may have seen the report. A spokesman said the DTI would await the outcome of the exchange investigation and decide whether to prosecute "anyone who may have leaked information or made any money from it".

The DTI said there was no pressure on Professor Littlechild to resign as a result of the latest fiasco.

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