The National Grid’s £7.8 billion intended purchase of Western Power Distribution, the regional DNO, is to be investigated by the Competition and Markets Authority.
As the first step in its enquiry, the watchdog yesterday issued an enforcement order against the ESO’s holding company, freezing any unauthorised transfer of ownership between either party or their associated companies. All integration of operating processes, including customer billing and databases, are also on hold.
Announced in March, the intended purchase had been justified as the ESO’s next step in deepening its focus on the growing complexities of power transmission and distribution, and integrating itself deeper vertically into Britain’s transforming electricity services market. Sale of the ESO’s controlling stake in National Grid Gas plc forms part of the strategy.
The CMA has published no dates to begin collecting or processing evidence of the proposed acquisition’s supposed impact on competition in grid operation. That has led to speculation the probe may be a formality.
Arguing against that interpretation are a string of recent CMA interventions as the UK power market re-structures and coalesces. The authority was shadowing SSE’s intended merger with npower, until Ofgem’s clamp down on standard variable tariff scuppered the deal. An asset swap between E-ON and Germany’s RWE, and Ovo’s takeover of SSE’s accounts, have also attracted the watchdog’s attention.
Reacting to the CMA’s intervention, a National Grid spokesperson confirmed the firm had made a voluntary submission to the authority in March when it broke news of the proposed acquisition.
More on the CMA’s case file on WPN here.
National Grid’s share price closed on the LSE today stood at 918.90 pence, up 0.54 % on the day.