Watchdog casts fresh doubt on Energy sale

A fresh shadow was cast over the flotation of British Energy last night after ScottishPower warned that it might re-open a key nuclear electricity contract with the generator.

The warning followed an announcement from the industry regulator, Professor Stephen Littlechild, calling for price cuts of between 3 and 5 per cent for business and industrial users north of the border.

The director general of Offer criticised ScottishPower and the other Scottish generator, Hydro-Electric, saying there was too little competition and warning that failure to reach agreement on price cuts would lead to a referral to the Monopolies and Mergers Commission .

But ScottishPower and Scottish Hydro, which dominate electricity supply in Scotland, dismissed his claims and said the best way to cut prices would be to renegotiate the contract with Scottish Nuclear, part of British Energy, under which they are forced to buy nuclear-generated electricity at above market rates until 2005.

That would put a big question-mark over British Energy's privatisation, as the company supplies half the electricity used in Scotland and any reduction in prices is likely to have a significant impact on profits.

Offer yesterday denied that its intervention now had been to get round a "gagging order" to be included in British Energy's pathfinder prospectus due to be published on Monday. A spokeswoman said Professor Littlechild would not be gagged, but admitted that the prospectus would contain a list of forthcoming statements from Offer and a warning that he retained the right to deal with unforeseen events.

In a statement, the regulator said that customers, suppliers and others had expressed concern about the development of electricity competition in Scotland, highlighting the lower penetration of suppliers to the business market than in England and Wales.

The practice under which the two Scottish companies were meant to make electricity available to alternative suppliers at the current pool- market price was not working, he said, and was therefore no longer appropriate.

He therefore proposed that the price of electricity bound for the competitive second-tier market should be based on a formula which in England and Wales resulted in a level around 6 per cent lower than the pool selling price.

In Scotland, customers in the competitive market could expect to see cuts of between 3 and 5 per cent.

The move angered the two Scottish companies, as they will continue to be forced to buy the highly priced nuclear-generated electricity but suffer selling price cuts which they are unable to recover from customers due to increased competition.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administrator

£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...

Recruitment Genius: Payments Advisor

£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...

Recruitment Genius: Investment Analyst

£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...

Day In a Page

Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago
Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests