Outlook: Get a move on Margaret Beckett

While the Government dithers about the future shape of the electricity industry events across the Atlantic look like forcing the issue. Just before Christmas two of the biggest US power groups, American Electric Power (AEP) and Central and South West (CSW) revealed pounds 4bn merger plans. Unfortunately for officials at the Department of Trade and Industry, who are already busy grappling with the review of utility regulation, the US deal also threatens to bring about the first merger of British regional electricity companies (RECs). AEP owns 50 per cent of Yorkshire Electricity, while CSW owns Seeboard, one of the earliest REC takeovers.

Though the merged American parent companies could obviously dispose of one or other of these British interests if that's what regulators demanded, they would certainly like to keep both of them and pool their resources. If this were allowed it would kick-start a host of other REC mergers, predicted for so long by industry insiders but resisted by the industry regulator, Stephen Littlechild at Offer.

All in all, the whole thing looks like a pretty unwelcome Christmas present for the DTI, which is already under intense pressure from Ed Wallis at PowerGen to let generators buy RECs. With pressure now mounting from the US, it is time for the government to make some difficult decisions. The sooner the DTI outlines its vision for the industry the better for all. The industry will be better able to judge whether consolidation makes commercial sense and regulators will be better placed to decide whether customers would be harmed by it. Get a move on Margaret Beckett.

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