PowerGen makes plea to be allowed to buy a REC

Ed Wallis, the chairman of PowerGen, today called on the Government to allow it to acquire a regional electricity company, arguing that unless strong, integrated power suppliers emerged the liberalisation of the electricity market next year could be "stillborn".

PowerGen was blocked by the previous government from buying Midlands Electricity on the grounds that it would undermine competition. However, it has never given up on its long-term ambition to add a supply business to its generating activities

Writing in The Independent, Mr Wallis says that if the opening up next spring of the domestic electricity market to competition is to succeed there need to be five or six strong players, much as in petrol, banking and supermarkets.

"The risk of competition being stalled or moribund as 12 incumbent monopolies simply try to defend their own home territory would end," he says.

Scottish Power and the Energy Group - currently the subject of a pounds 3.7bn bid from PacifiCorp of the US - already generate, supply and distribute electricity. "Allowing other generators to expand into electricity distribution and supply would break the current impasse ... And it will give domestic competition the kick start that it so desperately needs."

John Battle, the Energy Minister, was among a group of MPs who had dinner with Mr Wallis at the Labour Party conference in Brighton this week. Mr Battle is currently developing a new energy policy and has also taken a lead role in trying to ensure that domestic competition starts on time.

Analysts think it unlikely that PowerGen would make a move for a REC before next year.

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