RECs hand big price cuts to 5 million customers

Two of the largest regional electricity companies (RECs), Eastern and Southern, yesterday announced substantial price cuts from April affecting more than 5 million domestic customers.

Eastern, part of Energy Group which recently demerged from Hanson, is cutting charges by between 6 per cent and 9 per cent, knocking pounds 18-pounds 30 off an average pounds 300 bill. Southern, the only REC which is still independent, is to cut around 7.2 per cent off its charges, reducing average annual bills from pounds 272 to pounds 245.

Both companies confirmed the entire value of the reductions was the result of regulatory price changes they were obliged to pass on, or from the cut in the fossil fuel levy, a "tax" which subsidises nuclear power and other non-fossil fuels.

Southern had already reduced bills by 4 per cent last summer to take into account the cut in the levy. Eastern said about half of its price cut was the result of the levy reduction. The rest of the cuts come from lower National Grid transmission charges - the result of a tough new price regime starting next month - and the impact of the current distribution price cap which accounts for the bulk of the RECs' charges. This year Eastern must reduce its distribution charges by 2 percentage points below inflation.

Eastern is also introducing new pricing packages, including a tariff which offers a lower rate per unit if households spend more than pounds 225 a year. Prepayment meter customers will also see the pounds 25 surcharge Eastern makes for the service spread across the other charges. Another innovation is a "green" tariff, to be offered later this year, where customers could buy power generated mainly from renewable energy sources.

Roy Thompson, spokesman for the Eastern Regional Consumers' Committee, was sceptical about Eastern's announcement. He said: "They haven't done anything they didn't have to do, put it that way. We also would have preferred Eastern to have abolished the prepayment meter surcharge altogether."

Separately yesterday, the Electricity Consumers' Committees (ECC), the main electricity consumer group, agreed to take up a seat on the executive committee of the Electricity Pool, the controversial body which sets wholesale power prices. The move comes after a row between the two sides over lack of consumer representation in pool affairs.

Yvonne Constance, ECC chairman, said she would ''refuse to be bound by any confidentiality agreements in the pool".