Watchdog casts fresh doubt on Energy sale
Thursday 06 June 1996
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.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...
£20000 - £25000 per annum + OTE £35K - £45K: SThree: SThree Group have been we...