RECs win six-month delay to full competition

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The Independent Online
The introduction of full competition into the domestic electricity market is to be delayed for at least six months after an intense lobbying campaign by the industry.

The delay means that Britain's 23 million domestic electricity consumers will not all be able to shop around among different suppliers until the autumn of 1998 and perhaps even later.

Professor Stephen Littlechild, the industry regulator, announced yesterday that competition would be phased in from 1 April, 1998 based on postal codes. Initially, only 10 per cent of customers will be allowed to switch supplier when the market is liberalised.

A further 15 per cent of households or some 3.5 million customers nationally will be able to shop around from the end of May. A third phase of liberalisation, covering another 25 per cent of customers, will be phased in towards the end of July.

But the remaining 50 per cent of the market - accounting for more than 11 million households - will not be able to switch suppliers until mid- September.

The regional electricity companies (RECs) had proposed that the changeover be phased in over 18 months because of the huge logistical and technological problems posed by giving 23 million customers commercial freedom from day one.

Professor Littlechild has rejected this but he also said it would be necessary to monitor the situation closely. "If any significant problems arise it would be possible to delay or reduce the size of subsequent phases."

The first phase of liberalisation covering an initial 2 million customers will include all non-domestic consumers in the below 100 kilowatt market such as retailers and small businesses, those with half-hourly metering and those with multiple sites.

Eastern Group, Britain's biggest electricity distributor with 3 million customers, said: "We are pleased with the controlled market start up, the method of using post codes and the inclusion of all small businesses within the first phase."

Brian Staples, chief executive of United Utilities, the electricity and water supplier for the North-west, has put the costs of preparing the market for liberalisation at pounds 1bn. The company is spearheading a campaign to persuade Professor Littlechild to take these costs into account in setting his next set of price controls.