Outlook: London Electric

LONDON ELECTRICITY is about to swop one foreign owner, Entergy of Louisiana, for another, Electricite de France - or at least that is what EdF hopes, for EdF is a foreign bidder with a difference. It is owned by the French state. Under the previous Government, any such takeover would have fallen foul of the "Lilley doctrine" - named after Peter Lilley, the former Trade and Industry Secretary. This dictated that no privately owned British company could be bought by a state owned foreign one, since it would amount to a back door nationalisation, and one by an overseas country to boot.

In some respects this is an eminently sensible approach to mergers policy. It would not be possible to buy EdF, so why should EdF be allowed to purchase part of Britain's electricity industry? However, even if Peter Mandelson, the present secretary of state, shares this view, it is not immediately obvious he would be able to do anything about it. EdF reckons that since the takeover is a cross border one, jurisdiction falls to Brussels, not London, and since there are no competition issues involved and Brussels doesn't recognise the Lilley doctrine, the eurocrats will be obliged to clear it.

To this end, it has slapped an unconditional pounds 2bn bid on the table, so that if there is a regulatory problem, it will be EdF that acquires the risk of it. Against this sort of fire power, British Energy, the privatised nuclear generator which is also bidding for London Electricity, doesn't seem to stand much of a chance.

As a generator, British Energy perhaps faces more serious regulatory obstacles than EdF in buying an electricity distributor such as London Electricity. In the past the British competition authorities have either blocked these combinations or made them conditional on swingeing disposals. It is not apparent British Energy has the money to match EdF in shouldering this risk.

All the same, Mr Mandelson will want his say. Through the interconnector cable between Britain and France, EdF supplies about 7 per cent of Britain's electricity needs. If the Government can force Ed Wallis at PowerGen to dispose of a third of his generating capacity in return for being allowed to buy East Midlands Electricity, it would plainly be a nonsense if the authorities were unable to extract any concessions at all from EdF, which through the interconnector is a sizeable player in the British generator market.

There are three ways in which Britain might be able to get its oar into the regulatory process. Technically speaking, it is not possible for Brussels to vet an unconditional offer. If the EdF bid has to be made conditional on clearance, this might deprive the French of their price advantage over British Energy.

Alternatively, Britain could try and claw the decision back from Brussels on grounds of national security. A more promising route is through the licensing process. The electricity regulator must agree a transfer of London Electricity's operating license to EdF. Potentially this provides quite a bargaining chip.

A bare minimum set of demands would seem to be that the interconnector be made a two way street, so that Britain can sell electricity to France, and that full deregulation of the French electricity market happens on time, with out practical constraints, at the scheduled date next February. In the absence of these guarantees, the licence transfer should be refused on grounds of lack of reciprocity between Britain and France in the sale of electricity.

PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
people
Life and Style
techApp to start sending headlines, TV clips and ads to your phone
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Planning Manager (Training, Learning and Development) - London

£35000 - £38000 per annum + benefits: Ashdown Group: A highly successful, glob...

Asset Finance Solicitor

Highly Competitive Salary: Austen Lloyd: CITY - ASSET FINANCE - An outstanding...

HR Analyst - Banking - Bristol - £350-£400

£350 - £400 per day: Orgtel: HR Analyst - Banking - Bristol - £350 - £400 per ...

Techincal Accountant-Insurance-Bank-£550/day

£475 - £550 per day + competitive: Orgtel: Senior Technical Accountant-Insuran...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment