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Wednesday, November 17, 1999 Published at 13:24 GMT

Business: The Economy

Utilities face tough regulation

The government wants consumers to pay less for basics

The government has outlined tough regulation proposals for the privatised utility companies.

The Queen's Speech
The proposals, which are designed to "put customers first, cut prices and make utility regulation more transparent and accountable" were outlined in the Queen's Speech.

The Utility Regulation Bill proposes giving more power to industry regulators who will be able to fine companies for breaches of licence conditions and other requirements.

It will also promote competition and establish independent consumer councils for the water, electricity and gas industries. The councils will investigate complaints and provide advice.

Action on pay

Following criticisms of "fat cat" salary rises, the Bill will also force utilities to publish "links" between directors' pay and levels of service.

Last year, a survey showed that directors of the water, gas and electricity utilities enjoyed pay rises averaging 18%.

Also included in the Bill is a proposal to introduce competition into the energy market and a commitment to cede regulatory control for gas and energy to regulator Ofgem.

Ministers will be empowered to promote energy efficiency and the use of renewable sources.

Individual telecoms and energy regulators will also be replaced by regulator boards, while the government will appoint an advisory panel to back up the water regulator.

Boost for competition

Ofgem welcomed the planned legislation.

Callum McCarthy, Director General of Gas and Electricity Supply, said: "I am delighted that time has been found in the next Parliamentary session to take forward this important work. We expect Neta (wholesale electricity trading arrangements) to create more competition in electricity generation and drive down prices for domestic and industrial electricity users."

The Institute of Directors was unhappy about the possible involvement of regulators in setting directors' pay. Head of the policy unit Ruth Lea said: "We caution against the possible involvement of utilities regulators in the setting of directors' pay.

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