Electricity Privatisation (Hansard, 25 February 1991)

§ 1. Mr. Viggers
To ask the Secretary of State for Energy if he will make a statement on progress on the privatisation of the electricity industry.

§ The Secretary of State for Energy (Mr. John Wakeham)
Following the successful flotation of the 12 regional electricity companies with a total value to the taxpayer of around £8 billion, we are now proceeding with the sale of the two generating companies. I announced on Friday that the total value to the taxpayer of National Power and PowerGen would be more that £4.3 billion. This share offer has now been successfully underwritten. The offer will close on 6 March and dealings will commence on 12 March. The total value of the businesses comprising the electricity supply industry of England and Wales of more than £12 billion makes it by far the largest privatisation ever undertaken in the United Kingdom.

§ Mr. Viggers
I congratulate my right hon. Friend on the great skill with which he has undertaken these privatisations. In connection with the regional electricity companies, is not the most pleasing feature the fact that 98 per cent. of eligible employees have taken up shares and become shareholders? I also congratulate my right hon. Friend on the skilful and sophisticated arrangements that he has put in hand for the underwriting of the generating companies for privatisation. There have already been signs of innovative thinking by the electricity industry and, in the long run, will not the beneficiary be the consumer?

§ Mr. Wakeham
I agree with my hon. Friend that one of the main purposes of privatising these industries is to bring new thinking into the way they operate. I also agree that one of the pleasing things has been the way in which the employees have taken shares in the company, and many of them are continuing to hold those shares. That is satisfactory.

§ Mr. Haynes
I want to know what is going on. I think that the Secretary of State had better have a look at this privatisation of the electricity industry. What about the prices that these people are charging? I thought that the aim of privatisation was to look after the consumer. but consumers in my area are getting a right belting on prices. Is it not high time the Minister had a look at this, or he will not be coming to the Dispatch Box any longer?

§ Mr. Wakeham
The hon. Gentleman and I obviously read the same newspapers, but the companies have not yet made their proposals for price increases. When they have, they will have to justify them to the regulator, who I know will be looking at them closely.

§ Mr. Rost
Will my hon. Friend confirm that, as a result of privatisation, the vast overwhelming number of commercial and industrial customers are already getting lower electricity prices than they were a year ago, before privatisation, thanks to competition and the ability to shop around?

§ Mr. Wakeham
My hon. Friend is right. The vast majority are paying lower prices as a direct result of the competitive nature of the regime for commercial and industrial customers.

§ Mr. Dobson
The Secretary of State talked about bringing new thinking into the industry. Can he confirm that the new thinking started off with his approving a 9.2 per cent. price increase for domestic consumers last year, when the projected rate of inflation, however inaccurate, was 6 per cent. and that the companies are now contemplating increases up to 13 per cent. when the projected rate of inflation is only 5 per cent? That is the kind of new thinking that customers could well do without.

§ Mr. Wakeham
The hon. Gentleman is wrong. We have not yet had any proposals from the companies. As I have said, they will be making their proposals to the regulator, who will have to be satisfied that the increases are justified under the price regime that is included in the licence.