There has been concern among investors that the Government had information which, if widely known, would have affected the price paid for shares in the generators. The Treasury was aware before the sale was complete that the industry regulator, Offer, was about to make a statement on electricity distribution prices.
The statement, which came a day after dealings in new shares in the generators began, plunged the sector into chaos and infuriated those who had just bought the Government's remaining 40 per cent stake in the generators.
The Stock Exchange has completed its own inquiries into the sale and, it is thought, also feels that further action may need to be taken. The Department of Trade and Industry is understood to be involved in the discussions on the issue. One question is whether any blame should lie with the Government or its advisers, Barclays de Zoete Wedd and Kleinwort Benson.
None of the parties involved in the talks would comment.
Last week National Power, which paid pounds 453m buying back 100 million shares as part of the sale, said it was considering legal action against the Government. John Baker, chairman of National Power, said: "The price would have been different - that is lower - if the market had known what would happen. We are taking legal advice and we have put the Treasury on notice that we are considering our position."
Mr Baker also said that had his company known that a statement was due from Professor Stephen Littlechild, director-general of Offer, he would have "unequivocally" put that information into the public domain. National Power shares closed 3p down at 462p on Friday compared with the 460p paid in the share buy-back. National Power's purchase price is lower than that for other investors in the sale, to reflect that fact that it was paid in one lump while others are paying in installments.
Professor Littlechild announced on 7 March - the day after share dealings began - that he would launch a new review of electricity distribution prices, only a matter of months after five-year controls had been agreed with the 12 regional electrcity fims. The regulatory about-turn undermined investor confidence in the electricity industry and reverberated throughout the former nationalised utilities. It subsequently emerged that the Government was aware of some imminent statement on the previous Friday but having taken advice decided to proceed with the sale.