PROFESSOR Stephen Little-child. the electricity regulator, ruffled the feathers of Scotland's two power companies yesterday by urging them to hive off their pylons and wires to separate companies under independent ownership.
ScottishPower and Scottish Hydro-Electric, which together make nearly #300m of profits a year from operating high and low voltage wires in Scotland, protested at the measure outlined by Little-child in a consultation paper.
They said his proposals would simply lead to higher costs which would be passed on to the consumer.
But the regulator argued that, in a fully liberalised electricity market, the company that owns and operates the wires should be different from the company that delivers power through them to the consumer.
''Full separation of ownership of the supply and distribution businesses would be desirable,'' Littlechild said in a statement summarising his 160-page report.
''It would be desirable to bring the arrangements for transmission in Scotland in line with those in England and Wales by placing the transmission businesses of the two companies in Scotland, including the interconnector, into separate ownership,'' he added.
''Transmission'' refers to the high voltage network. But Little-child made clear that he also wanted the low voltage wires that carry electricity into people's homes to be hived off into separate companies.
His proposals have major implications for Scotland, because the power industry here is structured differently from England and Wales.
ScottishPower and Hydro-Electric are both vertically integrated companies that generate their own electricity, transmit it, and sell it to consumers within their respective franchise areas.
In England and Wales, on the other hand, electricity companies either specialise in generation (National Power and PowerGen for example) or supply and distribution. A completely separate company, National Grid, operates the high voltage transmission
network.
Littlechild wants to break up the supply chain monopolies in Scotland to create a UK electricity market operating to a single set
of rules.
But ScottishPower expressed outrage at his proposals and said there was no good reason to change the existing arrangements
Alan Richardson, the managing director for power systems, said: ''Vertical integration delivers high quality service and low cost products to customers. . . He is seeking to disrupt services to the customer and introduce higher costs to a business that is performing strongly.''
Richardson pointed out that ScottishPower already had to account separately for the profits it made from electricity generation, distribution and supply. He said ScottishPower would deliver a ''robust response '' to the regulator.
But Labour MP Martin O'Neil, who chairs the Commons Select Committee on Trade and Industry, said that in principle he supported the regulator's position.
''Is it right for a monopoly to remain in the hands of someone who has a vested interest in operating it in a particular way?'' asked the MP for Ochil in Fife, pointing out that Transco distributes gas in Scotland, but is independent from the companies that sell it.
''My first reaction is that they are being brought into line with the rest of the UK and that the Scottish situation has always been anomalous ,'' he said.
John Swinney, the economic affairs spokesman of the SNP, was less convinced of the need to separate electricity supply and distribution.
He expressed ''great unease'' at Littlechild's proposals. And he echoed Hydro-Electric's concerns that they could lead to higher distribution costs.
A Hydro-Electric spokesman said there was a danger that the uniform electricity tariff paid by all consumers in the North of Scotland could replaced by variable charges for different areas. Householders in Stornoway might end up paying more than those in Aberdeen, he noted.
Littlechild wants ScottishPower and Hydro-Electric to split their wires and electricity sales businesses into completely separate companies by the year 2000.
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