Robin Jeffrey, British Energy’s deputy chairman, said in Washington last night that the new company was already in discussions with several other power businesses to buy nuclear stations.
“We’re looking at a number of plants and are talking to the owners This is not to acquire a single plant Peco on their own could do that It’s bigger than that. Jim Whelan, Eastern’s managing director, said: “I would have thought it would have applied to all customers. These cuts are not the result of competitive pressure.”About pounds 14 of the pounds 28 saving came from the reduction in pipeline charges, following Transco’s defeat at the hands of the Monopolies and Mergers Commission.Centrica yesterday unveiled losses of pounds 216m for the first six months of the year, up from losses of pounds 53m during the same period in 1996. The figures included a pounds 192m charge to cover the windfall utility tax and a pounds 75m reduction in earnings due to the warm spring weather.. “We currently charge pre-payment customers less than they cost us. It’s an industry-wide problem,” responded Mr Gardner.The Gas Consumers’ Council called for an urgent investigation by Ofgas, the industry watchdog and the Government.

“We believe this represents a significant worsening of their position,” said Sue Slipman, GCC director.Last night Eastern Natural Gas, one of the largest independent suppliers, said the reductions had been implemented unfairly by Centrica. The levy, which disappears in April, was a special tax on old North Sea gas contracts.Roy Gardner, Centrica’s chief executive, defended the cuts, arguing pre- payment households were already subsidised. Although Centrica has a legal duty to pass on the cuts, it can decide how it implements the reductions. Centrica, the demerged British Gas supply business, has limited the pounds 28 cut to the 6 million homes that pay bills by direct debit and a further 10 million that settle bills within 10 days. The 3 million low income homes left out of the reductions, of which 1 million have pre-payment meters, will instead receive a only a price freeze when the cuts start on 12 January.
The move means those excluded will get almost no benefit from the reduction in pipeline charges in the new price formula for Transco, part of the former British Gas, or from the abolition of the gas levy announced in the Budget. It is just that where they were previously spread across various businesses they will now be focused on one industry and seeking to dominate it through achieving as much market share as they are allowed. And they will seek to ensure they keep their options open – not through outright purchases but through developing complex systems of partnerships and strategic alliances..

Some 3 million low income households are to be excluded from price cuts by British Gas next year, which will knock pounds 28 off average bills for its remaining 16 million customers. Unless, of course, like the former Hanson constituent, Energy Group, they are quickly pounced on by another predator.And that is the final factor that needs to be borne in mind before the end of the conglomerate is celebrated. Its demise does not mean that the era of the large company is over.Rather, as the planned mergers of Guinness and Grand Metropolitan and of BT and MCI demonstrate, large companies are likely to become even larger. Managers and advisers have echoed the claims in Break-Up! about the value locked up in these companies, often through expensive headquarters operations, only for many of the newly independent entities to produce poor returns. It is for this reason, suggests David Sadtler, a consultant and co-author of the recent book Break-Up!, that Greg Hutchings’ Tomkins is just about the last hold-out of old-style conglomerates.With nimble companies emerging all the time to exploit highly profitable niches, few widely diversified companies can give the attention required for effective competition to all their various segments.

Instead, they need to decide on what distinguishes them from their rivals and concentrate on that to the exclusion of all else.Because investors recognise this, conglomerates find themselves unable to gain the institutional backing to do the deals on which they depend, and can generally only win approval if they decide to go in for share buy-backs.However, these same people must have been disappointed by the amount of money released to them via the various spin-offs and demergers. Where previously, the arch predators were able – in the management jargon – to make a “core competence” out of running any kind of company, it is now almost impossible for them to do that with any kind of conviction. This is partly a response to changes, in Britain at least, to the accounting regimen. The Accounting Standards Board under Sir David Tweedie has pretty much outlawed the “kitchen sink” provisions and extraordinary items that acquisitive companies used to obscure the true costs of their spending sprees.But much more important is the move towards globalisation that has made the world a much more complex place in business terms. After all, we have seen focus, or “sticking to the knitting”, as it was once known, pushed before, only for companies to opt for diversification once more in the interests of balancing their exposure to sectors or countries.
This time, though, say the break-up proponents, it is different. The strength of sterling cost pounds 54m in translation and trading effects, but even stripping out exchange effects and exceptional items, profits slipped 5.7 per cent to pounds 534m.