Power suppliers will have to offer same price for all

Power suppliers were facing a further clampdown yesterday after being warned that they would not be allowed to pass the windfall tax on to consumers and would have to offer the same prices to all customers when full competition hits the electricity and gas markets next year.

John Battle, the Energy Minister, made it clear that suppliers would not be allowed to cherry-pick the most lucrative customers by offering special discounts only to those paying by direct debit.

Meanwhile, Professor Stephen Littlechild, the electricity industry regulator, said he would not be prepared to amend price controls to allow the cost of the windfall levy to be met through higher bills. "I don't start with the presumption that I need to do that. The aim of the levy is not to tax customers," he said.

Mr Battle's move follows growing concern at the wide differences in charges in competitive gas trial areas between poorer households on pre-payment meters and those who pay by direct debit. Tariffs from one independent supplier were 34 per cent lower for direct debit payers than for those with pre-payment meters, compared with a 14 per cent spread with British Gas Trading.

Mr Battle said the threat of "fuel poverty" was still a very real issue. "Social obligations must not be allowed to fall between the cracks ... If competition doesn't deliver a better deal for those who need it most I do not believe it will have delivered at all."

He said he had already told Professor Littlechild to start a review in the electricity market and would be doing the same with Clare Spottiswoode, the gas regulator.

Mr Battle also told the regional electricity companies they risked a crisis of confidence if they made a mess of introducing competition into the domestic market. "Those targets were set eight years ago. I want them to be met. I want no wrong bills and I want the timetable to be met." He said RECs that were not ready next year would face tough financial penalties, while those that succeeded would receive rewards.

Jim Forbes, chief executive of Southern Electric, insisted it was more important to ensure no customers were hit by computer billing problems. "If it's six or seven months late it's still a triumph for the UK because it takes us years ahead of the rest of the world." Southern said its computer systems would be ready for testing in January 1998, despite being singled out by the regulator last week for not keeping up with the timetable.

Southern yesterday blamed an 11 per cent drop in profits to pounds 255.5m on price controls from the regulator and higher interest charges associated with last year's share buyback. The grouppledged to spend pounds 100m on seven small gas generating plants.

Meanwhile Offer's annual report for 1996 shows that although complaints continue to fall nationally they rose by 25 per cent in the case of three RECs - Northern, Norweb and London. In Northern's case, complaints have increased for three years running. Professor Littlechild said he had asked Northern, Swalec and London to demonstrate how they intended to improve performance after a doubling in complaints about quality of supply.

The total number of disconnections meanwhile fell by 43 per cent to 477 with all regions apart again from Northern reporting a decrease.