Full competition in the electricity market will be delayed by at least five months because of the failure to design, test and integrate computerised settlement systems in time.
A report by PA Consulting, the advisers to the electricity regulator Offer, has smashed the government's hope that the market for domestic users could open up to full competition in time for the April deadline.
A concerned John Battle, the energy minister, is meeting with industry representatives on Thursday morning to agree a solution to the crisis, but the PA report concludes that at least a five-months delay is required before even an initial four Regional Electricity Companies can begin open trading.
However, any postponement is likely to force up the costs of deregulation and cut the predicted savings for consumers. A Department of Trade and Industry report last year warned that delays and increased costs for the settlement systems could reduce savings for every consumer by up to #40 over 10 years.
"A number of factors contribute to the slow rate of [national integration] testing, including participants' systems not being fully ready for integration, network facilities becoming unavailable or necessary data not being prepared in adequate time to support tests," said the report, published Tuesday.
Testing is taking significantly longer than expected, with some of the major integration test runs experiencing a 50 per cent failure rate.
A disappointed regulator Stephen Littlechild admitted it would be June 1999 before all domestic consumers had access to the competitive market. Penalties of up to #50 million are likely to be imposed on some or all of the RECs because of the delays.
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