RECs threaten Littlechild with referral
Saturday 30 August 1997
The privatised regional electricity companies (RECs) will make their continued opposition to the planned price regime clear next week during meetings with Professor Stephen Littlechild, the regulator. The companies believed to be most unhappy with the proposals include East Midlands Electricity, Midlands Electricity and Southern Electric. They will warn him that his revised proposals, published a fortnight ago, would still cut their profit margins so severely that they would discourage new suppliers from entering the market when domestic competition starts from next April.
Low profit margins have been blamed for the lack of interest in the electricity market shown by the big oil companies and supermarket chains.
In his fifth set of price proposals Professor Littlechild sought to stem the outspoken attacks from the industry by softening the anticipated cuts in electricity bills next year. He said domestic charges would drop by between pounds 15 and pounds 25 over two years from April 1998 on an average residential bill of pounds 270, excluding VAT, compared with expected cuts of pounds 32 in his previous consultation paper.
The chief executive of one large REC said the concessions did not go far enough. "This is still quite clearly MMC material. Nothing has changed since the last proposals and we can't see why anybody should be happy with this. The situation is still a nonsense."
Professor Littlechild had claimed the softer price proposals, which reflected the increased estimate of the cost of introducing competition next year, would avert an MMC referral. "I don't think there's a justifiable basis for a company to go to the MMC," he said at the announcement.
The row centres on his plan for a cap on total bills for the first time, replacing the present system which allows the RECs to pass increases in generation costs to consumers. Savings next year will come mostly from lower generating charges when existing coal contracts come up for renewal. Generation accounts for around 60 per cent of household bills.
The RECs are also unhappy at the plan to cut profit margins on their supply businesses, the divisions responsible for billing customers which are being opened to competition.
Electricity supply, already a low-profit operation compared with distribution, accounts for only about 7 per cent of customer bills.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Rotten egg smell could help battle heart disease and Alzheimer's
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...