Power price control 'too tough'
Friday 16 June 1995
Scottish Hydro-Electric won a modest victory over the regulator, Offer, following a proposal by the Monopolies and Mergers Commission that said price controls were too tough. The results of an MMC inquiry, published yesterday, would allow Hydro-Electric an extra pounds 5m profit a year compared with a formula put forward last year by Offer.
The report failed to dampen fears about regulatory uncertainty in the electricity industry, with the 12 regional electricity companies still awaiting the outcome of their own price review. Shares in the sector fell relative to the market. Hydro-Electric shares were down 6.5p at 336.5p.
There was some confusion as to how the MMC proposals - yet to be translated into price controls by Offer - would help customers. Offer said the average household would save pounds 57 over three years under the MMC plan compared with its proposal of pounds 70. But Hydro-Electric calculated that the reduction would be about pounds 35 over three years, based on an average pounds 400 bill.
Professor Stephen Littlechild, Director General of Offer, said: "I do not think this is too different to my proposals, although there are some differences in the detail." He said he would consult with the industry before implementing any changes.
Professor Littlechild said he would consider the implications of the report in his review of electricity distribution prices in England and Wales, due for completion in July. He said it is too soon to draw any conclusions, but pointed out the MMC had confirmed his view that seven per cent of return on assets is "reasonable".
Roger Young, chief executive of Hydro-Electric, said: "If the regulator accepts the MMC's proposals, our customers in the north will continue to enjoy falling real prices while receiving the rising quality of supply they deserve."
He said the key issue was not the overall profit but the MMC's acknowledgement that Hydro should be allowed to invest more in upgrading its wires than Offer said. The MMC has also agreed a transfer of pounds 29.2m a year for five years from the generating business to the distribution business to help fund this investment programme.
Mr Young said that should Professor Littlechild not stick to the spirit of the MMC report, the company might seek a judicial review of new price controls.
- 2 Smartphones are making children borderline autistic, says psychiatrist
- 3 Why this father didn’t hide his daughter’s heroin overdose in her obituary
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
Smartphones are making children borderline autistic, says psychiatrist
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
Nepal earthquake: The race is on to help thousands trapped under rubble around Kathmandu, while remote villages face a long wait for help
Royal baby: Live updates as superbug closes ward at St Mary's Hospital where Duchess of Cambridge is due to give birth
Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
The sickening truth about food banks that the Tories don't want you to know
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...