Common carriage is to be confined initially to customers using 250 megalitres of water a year or more – that’s only about 600 nationwide. And in practice using alternative water suppliers is only likely to be economic for those located close to the borders of the present water regions, reducing the number of potential beneficiaries still further.With all the other monopoly utilities, competition has begun with big industrial users and only slowly progressed to domestic customers. Its starting point is that prices are too high and that the best way of redressing this is through competition. With modern technology and operating systems, Mr Gummer believes, it should be perfectly possible to develop “common carriage”, allowing competitors to supply water within the franchise of an existing operator Great. So we can look forward to the type of competition that already exists in telecommunications and is fast being developed for gas and electricity, can we? Well, not quite.

Even judged against the water industry’s somewhat soporific Richter scale of events, this one would be hard pressed to register much more than one. If the cause of the weekend’s sensation was John Gummer’s propaganda machine, then he must have intended it as an April Fool’s joke. The Environment Secretary’s proposals for “increased customer choice” add up to little more than a hill of beans.
What the Government wants, and what it is going to get, are two very different things. Eight of the 12 Recs will have been swallowed up by rival UK utilities or large overseas operators if the bids by National Power and PowerGen go through.It would also result in a sharp increase in vertical integration of generation and supply – reversing the way the industry was broken up on privatisation in 1990.PowerGen has already agreed to sell 2,000 megawatts of plant to Hanson, which now owns Eastern Electricity while Hanson is among four bidders short-listed by National Power for 4,000 megawatts of capacity it must sell off.The two generators have argued in evidence to the MMC that this, along with Scottish Power’s takeover of Manweb, has created the precedent for vertical integration within the industry.Comment, page 19. What was heralded in the weekend press as the biggest upheaval for the industry since privatisation has in practice turned out to be something of a damp squib.

So much for the promised radical shakeup of our water industry. The Monopolies and Mergers Commission delivered its verdict on the two bids to Lang’s office on Friday – a week earlier than expected – and an announcement is expected in the next four weeks.
Shares in all four power companies rose as the market bet that both bids would be cleared although with conditions attached to prevent the two generators wielding undue influence in the market.In return for approval, the generators have volunteered to ring fence their generation and supply activities, guarantee transparency in pricing and ensure that the market for contracts is sufficiently liquid to prevent them from rigging the electricity pool.Should the two bids be waved through there is speculation that it will re-ignite interest in the remaining independent Recs from foreign utilities and electricity companies. Trade Secretary Ian Lang has received reports on the bids for Southern Electric and Midlands Electricity by National Power and PowerGen, fuelling speculation that another bout of takeover activity is about to hit the sector. Meanwhile, the amount of notes and coins circulating in the economy – seen as a good measure of consumer spending – edged up 1.5 per cent in the first quarter, suggesting people are increasingly confident about splashing out on high street goods.
The figures were seen as reinforcing expectations of a continuing slow- down in the economy, increasing the prospects for a further cut in interest rates from their current 6 per cent.But most economists yesterday held to the line that rates, cut three times in the past three months, were more likely to move in May than following tomorrow’s meeting between Bank of England Governor Eddie George and Chancellor of the Exchequer Kenneth Clarke.In the markets, the June short sterling contract – a key indicator of expectations for short-term rates – was up two basis points at 93.94, pointing to little change.The purchasing managers’ index, usually one of the first monthly pointers to the health of manufacturing industry, fell to a seasonally-adjusted level of 49.7 in March, down from 49.9 in February.. UK manufacturers saw output drop in March to its lowest level since October 1992, the seventh month in a row when production has been either flat or falling, according to Britain’s purchasing managers. Latest figures show Britain’s manufacturing industry on the verge of a slump, just as the high street is showing signs of recovering the elusive “feel-good” factor lost in the last recession. Industry sources say that Deutsche is BT’s favoured buyer, but a spokesman for the German group said: “In this industry everyone is talking to everyone.”City analysts have also speculated that Mercury – BT’s big UK rival would have to be divested – could be bought by Nynex, the cable company or by AT&T of the US.BT has consistently refused to comment on its plans other than to confirm that its advisers are in talks with those of C&W..