Hydro-Electric goes to MMC over Offer rules
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Hydro-Electric, the smaller of the two Scottish electricity companies, has rejected tougher-than-expected new price controls set by the industry regulator, Offer. The decision means the issue will be referred to the Monopolies and Mergers Commission.
Roger Young, chief executive, said that the new price controls, due to take effect in April 1995, would act against the interests of shareholders and customers. He said the company supported Offer's desire to see electricity bills fall but added that Hydro-Electric already had among the lowest prices in Britain.
A spokesman for the company said that the proposed price controls would leave it with too low a rate of return and threaten necessary investment in the electricity distribution network.
'Each year, Hydro-Electric needs to spend substantial sums on its programme to refurbish up to 900 miles of its network, much of which was built 30 to 60 years ago,' he said. 'Failure to do so will jeopardise reliability and store up a backlog of work for the next decade.'
The company said that the pricing regime was more onerous than that imposed on Scottish Power or the 12 regional electricity companies in England and Wales. However, some City analysts were surprised at the decision to go to the MMC.
One analyst said that even with the new controls Hydro should be able to increase dividends by 5 per cent in real terms to the end of the decade.
He pointed out that if the company failed to gain a more lenient price control as a result of a reference the credibility of the management would be at risk.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments