Power price curbs urged

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The Independent Online
CONSUMER groups are calling for a crackdown on electricity prices in advance of price controls to be announced on Thursday by Offer, the industry watchdog.

The National Consumer Council said that the price caps should be extremely tough to redress the balance between customers and shareholders in the electricity firms.

A spokeswoman for the NCC said: 'The regional electricity companies have been generously endowed with cash. Although price increases since privatisation have been legal, the companies could have lived without them.'

The attack on prices was taken up by the Consumers Association. Philip Cullum, policy research manager at the association, said: 'People have been paying far too much and although companies have recently been announcing some price freezes or rebates, it is not nearly enough.'

The association said that until prices began to freeze or come down slightly in April, they had been rising by more than inflation each year.

Last week, the chairmen of the 14 Electricity Consumers Committees set up under the Act privatising the industry, said that price reductions must at least offset the impact of inflation on domestic fuel bills from April 1995.

Professor Stephen Littlechild, the director-general of electricity supply, is expected to impose a one-off cut in electricity distribution prices of 10-20 per cent, to take effect next April. He is also expected to impose a price cap from that date of inflation minus 2 or 3 per cent. This compares with inflation plus about 1 per cent under the current regime.

Consumer groups are likely to be disappointed as distribution - the sending of electricity over the wires - accounts for only a quarter of the average household bill.

But for the companies, the impact could be significant as distribution accounts for the bulk of their profits.

Despite the threat of a tougher regime, analysts believe the electricity companies will still be able to increase dividends in real terms by between 4 per cent and 6 per cent up to the turn of the decade.

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