Dept.Trade&Industry - Re NationalPower Undertakings

RNS No 4189a
DEPARTMENT OF TRADE AND INDUSTRY
1 October 1999

                            
    STEPHEN BYERS ACCEPTS NATIONAL POWER UNDERTAKINGS

Stephen Byers, Secretary of State for Trade and Industry,
announced today that he had accepted undertakings from
National Power plc that it will divest its 4 GigaWatt(GW)
coal-fired power station at Drax, in North Yorkshire, on
a clean break basis, and agree early modification of the
existing arrangements under which it receives earn-out
payments from Eastern Group plc, so as to reduce the
influence of these arrangements at times of  year when
Pool prices tend to be low.  National Power's acquisition
of the supply business of Midlands Electricity plc will
therefore not be referred to the Competition Commission.

Mr Byers said:

"National Power has undertaken to divest its 4 GW coal-
fired power station at Drax, in North Yorkshire, by 30
November 1999, or such later date as I may agree in
writing, to a purchaser or purchasers and on terms to be
approved by me.  National Power has also undertaken that
it will vary its existing right to receive earn-out
payments from Eastern Electricity plc so that, from 1
June 2000 until the right expires on 31 March 2003,
payments received will be reduced by #1.50 per MegaWatt
hour for each of the months of June, July, August and
September.

"I announced on 9 April my intention to seek undertakings
from National Power on these lines.  I also announced my
decision that National Power and Midlands should give
certain further assurances to address competition and
regulatory concerns arising from the merger.    I
subsequently published draft undertakings for
consultation on 5 August.

"I have had regard to the DGFT's advice that the
undertakings now given by National Power, together with
the assurances now given by National Power and Midlands
Electricity, meet the requirements which I outlined for
remedying the adverse effects of the merger.  In the
light of the DGFT's advice, I  have decided to accept the
undertakings in lieu of a reference to the Competition
Commission.

"I shall continue to consider any future mergers in this
sector on their own merits, and in the light of the
DGFT's advice and the views of the DGES in each case."

 The DGFT's advice on adverse effects in the present case
is attached to this press notice.  Also attached are the
final text of the undertakings and the assurances.   Most
of the assurances have been incorporated into licence
conditions enforceable under the Electricity Act 1989.

Notes for Editors

1.   Section 75G of the Fair Trading Act 1973 (inserted
by section 147 of the Companies Act 1989 and amended by
the Deregulation and Contracting Out Act 1994) enables
the Secretary of State to accept undertakings as an
alternative to making a merger reference to the
Competition Commission.  The Secretary of State must
consider whether such undertakings are appropriate to
remedy the adverse effects of the merger specified by the
DGFT which would otherwise have led him to make a
reference to the Commission.

2.   Media copies of the Undertakings and assurances
signed by National Power and the DGFT's advice are
available from the DTI Press Office.


END

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