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
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tv
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence