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.
- 1 If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
- 2 Moscow voted the world's unfriendliest city
- 3 Idris Elba is ‘too street’ to play 007, says James Bond author
- 4 Pansexual: What is it - and when did the term gain popularity?
- 5 I'm pansexual – here are the five biggest misconceptions about my sexuality
Bono's group has made more money from Facebook investment than from all his music
Miley Cyrus calls out hypocrisy of women’s nipples being taboo
Auschwitz museum defends mist showers installed during heat wave after visitor complains they are reminiscent of gas chambers
More than 11,000 Icelanders offer to house Syrian refugees to help European crisis
Nazi 'gold train': Fire engulfs suspected location of vehicle in Poland
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
UN investigating British Government over human rights abuses caused by IDS welfare reforms
iJobs Money & Business
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...
£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...
£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...
£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...