Power sell-off is `potentially disastrous'
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Politicians and consumer groups have attacked the planned pounds 8bn-plus takeover of National Power, one of the UK's prime electricity generating companies, by Southern Company of the US.
The Consumers' Association also weighed in heavily, slamming the American firm's plans as "potentially disastrous" for electricity customers and for competition in the industry.
The row broke yesterday after Southern, which only last year secured a strong position in the UK electricity market by buying SWEB for pounds 1.1bn, confirmed stock market rumours that it was planning to do a deal with National Power.
John Battle, shadow Energy Minister, said he doubted whether the Americans' aspirations were in the public interest or "the long-term interests of consumers."
A spokesman for the Consumers' Association added that "competition in the marketplace would be diluted rather than increased", and called for the Monopolies and Mergers Commission to take a "tough line" on electricity mergers to protect the consumers' interests.
While many City analysts are sceptical about the Americans' chances of success, because of the mountain of regulatory and political hurdles, it is understood that the Government is preparing to use its all-powerful "golden share" in National Power to engineer a dramatic shake-up of the electricity industry as long as Southern agrees to sell several power stations.
The formal announcement by Southern fuelled some heavy speculation in National Power's shares which, following the previous day's surge, soared 56.5p to pounds 578p - boosting the company's value by several hundred million pounds to pounds 8.3bn.
Southern has been preparing its plans to make a takeover move against National Power, which generates a quarter of the UK's electricity, for almost a year. The US company, however, is not thought to have had any formal contact with Ian Lang, President of the Board of Trade.
The bid has come at a bad time for Mr Lang, who is widely believed to be about to clear the way for National Power and its main rival, PowerGen, to resurrect respective takeover bids for the regional generators Southern Electric and Midlands Electricity.
The bids were put on hold last year after the Monopolies and Mergers Commission launched an investigation into the industry. News that the deals would be allowed to go ahead was leaked to the Economist last week, embarrassing the DTI.
Power shake-up, page 19
City Comment, page 21
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