Deregulation
Callum McCarthy, the new Director General of Electricity Supply in the UK, has been at the centre of a number of controversies during his first three months in office.
In January, he voiced his concerns over manipulation of bid prices to the Pool. He issued a number of warnings during February, and then, when this had little apparent effect, he publicly named those guilty of the most abuses of the system. He said he held Eastern responsible for most such abuses. McCarthy also announced a proposal to replace complex pricing with simple bids.
McCarthy said that the Electricity Pool was to blame for the difficulty, as it had failed to take the problem seriously. Since then the Pool has announced that it intends to introduce, within the next three months, modifications to the method of evaluating bids.
In March, McCarthy proposed alterations to the operating licences held by the operators and National Grid, with possible referral to the Monopolies and Mergers Commission. This knocked an immediate 1.3 per cent off the share value of PowerGen and National Power.
In addition, McCarthy has made it clear that he is strongly opposed to the de facto gas moratorium imposed by the British government. The government is likely to lift the moratorium when the gas and electricity markets are opened up to full competition throughout the UK. He also severely criticised the generators, who have been complaining that uncertainty in the run-up to April 2000 has harmed their ability to compete abroad. He said: “I think the degree of regulatory uncertainty is deeply exaggerated. The regulated 14 public supply companies who complain about regulatory uncertainty have actually delivered to their shareholders a total return far in excess ofthat offered by the FTSE All-Share Index.”