Dec. 11, 2000In a release following the UK Competition Commission’s decision on Office of Gas and Electricity Markets’ (Ofgem) “good behaviour” clause, British Energy welcomed the commission’s conclusion that the rule would cause uncertainty and possibly deter normal competition.
The commission’s summary followed an eight month inquiry into Ofgem’s proposed Market Abuse licence condition the “good behaviour” condition. On Dec. 11, energy regulator Ofgem published the decision by the Competition Commission not to give the go-ahead for a market abuse licence condition to be included in the licences of two electricity generators, British Energy and AES.
The commission agreed with British Energy’s view that the condition would cause uncertainty and would risk deterring normal competitive behaviour, saying that: “Competition should be given the opportunity to work in the new circumstances of NETA, and with a less concentrated generation sector, without the introduction at this stage of new broadly framed regulation.”
Peter Hollins, British Energy’s chief executive, said “I am very happy with this outcome and I commend the Commission for the clear and unambiguous way in which it has set out its findings.”
British Energy had objected to the original condition, primarily because it would create uncertainty and because it represented such a radical change to the way in which competition issues were to be regulated in the electricity industry, that a thorough consideration by the Competition Commission was necessary before the condition was implemented.
Hollins said: “This is an important report, the first of its kind and will undoubtedly reduce significant elements of regulatory uncertainty in many key areas. It will help to ensure that in future there is a fully effective and more stable regulatory regime for policing competition issues in our industry.
“This Report has implications not just for BE and AES, but for the whole electricity industry. I would therefore urge Ofgem to publish the full Report as soon as possible.
“However, it is critical that we all move on positively from here. For British Energy that means concentrating on our key tasks of improving our output and reducing our operating costs in an increasingly competitive market,” he added.
About the Competition Commission
The Competition Commission is an independent public body established by the Competition Act 1998. The Commission replaced the Monopolies and Mergers Commission on 1 April 1999.
The Commission has two distinct functions. On its reporting side, the Commission has taken on the former MMC role of carrying out inquiries into matters referred to it by the other UK competition authorities concerning monopolies, mergers and the economic regulation of utility companies. Secondly, the newly established Appeal Tribunals hear appeals against decisions of the Director General of Fair Trading and the Regulators of utilities in respect of infringements of the prohibitions contained in the act concerning anti-competitive agreements and abuse of a dominant position.
For more information, visit the commission’s web site at https://mmc.gov.uk.