Midlands to trim power prices by 2%

MIDLANDS Electricity is to cut prices for domestic customers by 2 per cent from 1 April, following the trend in the electricity supply industry in England and Wales. The company said the latest change, combined with earlier price cuts and rebates, meant customers were paying pounds 38 less in real terms than they were three years ago, writes Mary Fagan.

Bryan Townsend, chairman, said the price reductions would largely offset the effect on customers of the imposition of value added tax on fuel bills from April. About 5,000 of Midlands' domestic customers have paid in advance to avoid all or part of next year's VAT on electricity bills, but the company said it expected a last- minute rush.

Almost all the regional electricity companies have announced that bills will be frozen or cut from next month, ensuring they stay within their regulatory price controls.

In some cases, the reductions are the result of a fall last year in the price of coal for power generation, the benefit of which must ultimately be passed through to consumers. Electricity charges also have to be adjusted if the companies wrongly forecast inflation when setting their prices last year.

The companies are also thought to be keen to appease the regulator, Professor Stephen Littlechild, who is reviewing the price controls for electricity distribution to take effect from April 1995. A spokesman for Midlands said: 'We have been able to do a good deal in purchasing our electricity and we have continued our cost-cutting drive.'