Power price cut deal for ICI sparks fears of user uproar

Click to follow
The Independent Online
A BATTLE is brewing over a government plan to allow ICI to buy cheap electricity.

PowerGen, the generator supposed to be supplying the power, was not originally consulted over the proposals, which are being discussed by the Department of Trade and Industry and Offer, the industry watchdog.

National Power, the other UK generator, is understood to be worried that the deal might open the floodgates for other large electricity consumers to demand special treatment.

One industry source said: 'If that happens, it is all getting back to the old system when the Central Electricity Generating Board subsidised big users.'

It is feared that other customers may end up footing the ICI bill. Under their current licences, the generators cannot cross-subsidise one customer at the expense of another. However, the Government is considering changing the rules affecting PowerGen, headed by Ed Wallis, to allow ICI to buy cheaper power.

ICI said last year that 7,000 jobs at its chemicals plant at Runcorn were threatened because its electricity costs are too high. The Government is understood to have come up with a scheme to supply the plant from PowerGen's Ince power station.

The move would help ICI to avoid the costs of trading through the electricity pool and there are plans under discussion to remove the 11 per cent nuclear levy on direct sales to ICI. Taken together, the measures could cut 15 to 20 per cent from the electricity bill at Runcorn.

The Major Energy Users' Council has said that others will want fair play if the ICI deal goes through. Large customers such as Blue Circle and British Steel say that in a free market they should also command low prices as bulk buyers of power.

There is also concern that too many power stations will become dedicated to specific large customers which want cheap power. The moves could make a mockery of the pool system, which is designed to use the cheapest plant operating at any one time to meet demand.

The pool has been asked by the Government to assess the implications of the deal for ICI, but has not yet responded.

(Photograph omitted)