Electricity consumers blow a fuse over bills

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The Independent Online
ANGER greeted new controls on household electricity bills in England and Wales announced yesterday by the regulator, Offer. The price caps were attacked by the Labour Party and consumer groups as too little and too late for consumers and far too lenient for the industry.

Environmentalists said Offer's new regime does nothing to promote energy efficiency. Unions said the cuts were intolerable and could mean 10,000 job losses in an industry which has shed 30,000 staff - one third of the workforce - in recent years.

The average household electricity bill will come down by up to pounds 90 over the next five years, beginning with cuts of between pounds 12 and pounds 16 next April. Customers will pay pounds 2.5bn less over the five years than without the new price controls. Nevertheless the curbs are much less onerous than the industry had expected and shares in the 12 regional electricity companies rose sharply after the announcement.

Critics pointed out that the imposition of full VAT on domestic fuel bills next April will more than wipe out any advantage of the cuts imposed by Offer. Robin Cook, Labour spokesman on industry, said that even after the price cut the average consumer will pay pounds 36 more a year for electricity because of VAT. He said privatisation has proved a licence to print money for the electricity companies: 'Since privatisation their costs have come down but their prices have not. Electricity companies have been free to coin in the profits by abusing their monopoly. The regulator should have ordered cuts before now. He could have been tougher and he knows it.'

Offer's own Electricity Consumer Committees said the price cuts were 'pretty small beer'.

The Consumers' Association said: 'These cuts are nothing like as tough as we expected, given the massive profit levels chalked up by the electricity companies.'

The National Consumer Council said Professor Stephen Littlechild, director general of Offer, had been too generous to the companies. 'He is the only person standing between the monopoly and the customer and he should have gone much further. The experience with regulators so far is that they benefit the companies more than consumers.'

The price of power, page 2

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View from City Road, page 25