The high cost of low-power shares

Nearly a million-and-half shareholders in National Power and PowerGen are being asked to stump up hundreds of pounds for the final instalment on the shares they acquired in the second part of the government's privatisation of the electricity generators, writes Steve Lodge.

The cash call comes as 622,000 customers of National & Provincial building society are sent free shares in Abbey National as part of the Abbey's takeover of the N&P.

The National Power and PowerGen shares requiring extra payment are those issued in March 1995, not the earlier first tranche. The final instalment is 136p per National Power share and 142p per PowerGen share - or for those qualifying for the discount, 121p and 127p respectively.

Cheques must be returned by 12 September to clear by the deadline of 3pm, 17 September. Shares held through share shops or other "nominees" (PEPs, for example) may have earlier deadlines.

But with political and regulatory worries hanging over the generators, and less-than-impressive share performances, investors might not be overkeen to stump up more cash.

The partly paid National Power shares finished the week at 265p, well down on the 330p or 340p cost to date (depending on whether investors qualified for the discount on the second instalment). The PowerGen shares finished at 365p compared with their 360p or 370p cost to date.

These comparisons ignore dividends - with National Power's recent 100p special payout being the most significant - but even then, neither set of shares have been great performers.

The shares do at least offer a good income - National Power's dividend is equivalent to 7 per cent of its share price, PowerGen's 5 per cent. But if you don't fancy handing over any more money you need to sell by this coming Friday (6 September) to avoid being liable for the final instalment.

By comparison, customers of the old N&P - who were sent their free shares this week - will be pleased to note that their windfall is already showing further profit. The basic handout was 89 shares, worth pounds 500 based on a share price of 567.35p. But the shares finished this week at 593p, making the basic handout now worth pounds 527.