Electricity firms row over costs

The electricity industry is heading for another row over the introduction of domestic competition in 1998, and about who will pay the cost of the computers and other systems needed to allow orderly trading to take place, writes Mary Fagan.

The regional electricity companies believe the total bill could be pounds 200m to pounds 300m instead of the pounds 50m suggested by the regulator, Offer, and are concerned that shareholders should not bear the brunt of the costs.

East Midlands Electricity has complained to Offer, calling for clarification of the situation and how the costs will be recouped. It is thought that the regional companies agreed at a meeting on Monday to pay pounds 50m, clawing it back from customers only once the benefits of competition have been established. However, East Midlands argues that the sum will cover only the costs of changes in the electricity trading pool and fails to recognise the impact on the individual companies.

The company pointed out yesterday that Ofgas, the gas watchdog, put the cost of introducing competition in gas at pounds 180m and that this is a much simpler task.

A senior executive of one company also warned that there could be chaos in 1998 unless Professor Stephen Littlechild, director general of Offer, assumes direct responsibility for driving the project. "In gas the Government and the regulator took the reins. In electricity no one `owns' the project - no one is willing to take control," he said.