Small is profitable for power company

Scottish Hydro-Electric, which is the main electricity distributor for the north of Scotland, is one of Britain's smallest power generators, writes Jojo Moyes.

Privatised in 1991, it was the only company in Britain last year to defy the advice from Offer, the electricity regulator, to lower its prices and it was subsequently referred to the Monopolies and Mergers Commission, which produced what Scottish Hydro-Electric called "a tough but fair" report in June this year saying that customers' bills should be cut.

Earlier this month it reported half-yearly profits of pounds 65m. The increased income has been largely due to a massive sales drive south of the border. More than a third of the company's total electricity sales and 30 per cent of its total turnover is now accounted for in England.

In September it told its 3,500 workers that it aimed to cut costs by 20 per cent over the next two and a half years, just three months after it announced record profits of pounds 200m and earned its shareholders profits of pounds 53m.

Despite this, Hydro, as it is known, has generally attracted less criticism than some of the other privatised utility companies. The MMC report led to plans to cut bills by 8.5 per cent, saving customers an average pounds 63 over three years. And the chairman, Lord Wilson of Tillyorn, collects a relatively modest salary - compared with those in other privatised utilities - of pounds 130,000.