Power shares gain ahead of Offer review
Wednesday 05 July 1995
Shares in the regional electricity companies made strong gains yesterday following confirmation that the new price controls would be announced on Friday by Offer, the industry regulator.
The view among analysts is that the controls will not be tough enough to be rejected by any of the companies in favour of a reference to the Monopolies and Mergers Commission.
There is a growing consensus that Professor Stephen Littlechild , director general of Offer, will announce a one-off cut of 10 per cent on electricity distribution charges next April, followed by an annual cap of inflation minus four percentage points.
The effect on customers' bills will be much less as distribution accounts for only about one quarter of the amount people pay.
One analyst said that the saving for customers could be pounds 200m in the first year of the regime.
He added that if Professor Littlechild met market expectations, companies could still increase dividends by about 6 per cent annually in real terms up to the end of the decade. The announcement on Friday brings to an end four months of speculation since Professor Littlechild shocked the industry by announcing the distribution price review.
His statement overturned a regime agreed only last August with the companies and within hours wiped pounds 3.5bn from the value of electricity shares.
The August regime imposed a reduction varying among companies from 11 to 17 per cent from April this year - which took effect as planned - with a subsequent cap of "RPI minus 2".
Professor Littlechild said in March that his decision to look again at distribution charges, which account for most of the regional companies' profits, was prompted partly by the sustained rise in the share prices since the agreement last year.
He also cited Northern Electric's ability to offer more than pounds 500m in sweeteners to shareholders in defence of a bid for the company by Trafalgar House, which later lapsed.
The review has split the industry. Larger companies are seeking a clamp- down on the smaller of the 12 firms, which tend to have higher household bills.
- 1 Scottish referendum: So how about the English now being given a chance to split from England?
- 2 London council removes 'unacceptable' Stamford Hill posters telling women which side of the road to walk down
- 3 Kim Kardashian 'nude pictures' leaked on 4chan in new celebrity hacking attack weeks after Jennifer Lawrence scandal
- 4 Matthew Miller: American sentenced to hard labour in North Korea 'wanted to be Snowden II'
- 5 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
London council removes 'unacceptable' Stamford Hill posters telling women which side of the road to walk down
Kim Kardashian 'nude pictures' leaked on 4chan in new celebrity hacking attack weeks after Jennifer Lawrence scandal
Isis in Syria: 60,000 Kurds flee terror in new exodus
Alan Henning kidnapping: British aid worker's wife appeals to Isis to release him
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Archbishop of Canterbury admits doubts about existence of God
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...