Watchdog to examine generators

OFFER, the electricity watchdog, has launched a wide-ranging investigation of the costs and profit margins of National Power and PowerGen, writes Mary Fagan. Professor Stephen Littlechild, director-general of Offer, is worried that the companies may be charging too much for their power. If his fears are well- founded, he could refer the companies to the Monopolies and Mergers Commission or seek powers to control their prices or to reduce their market power.

'The dominance of the two companies is still a concern,' Professor Littlechild said. 'It will be one of several considerations to be taken into account in deciding whether to refer them to the MMC.'

He has already said that a decision on an MMC reference on the generators would be made no later than 1995.

At the same time Professor Littlechild gave the go-ahead for the regional electricity companies to buy power from gas-fired electricity plants. New gas-fired projects, in which many regional companies are investing, are partly to blame for plans to close 31 coal mines with the loss of 30,000 jobs.

He said that, while coal-fired power could be cheaper in some instances, the overall 'dash for gas' was economically justified.

Commentary, page 23