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S+W secure EU power concession

17 March 2006

A new European Commission ruling is set to increase opportunities for businesses to win supply contracts with Great Britain's major electricity producers.

Advised by leading Scottish legal firm Shepherd+ Wedderburn, together with the Gantt Consultancy, the Association of Electricity Producers (AEP) has persuaded the Commission to exempt power generators in Great Britain from the Utilities Procurement Directive which imposes strict rules on the letting of contracts by companies in the water, energy, transport and postal sectors.

The exemption, which covers generators in England, Scotland and Wales, is the first to be granted by the Commission under the Directive, which was implemented in the UK in January this year.

AEP chief executive, David Porter described the decision as a significant breakthrough.

"We are delighted that the Commission has accepted that the GB generation market is fully competitive and should no longer be subject to the Utilities Directive. The EU procurement rules, though well-intended, imposed unnecessarily heavy burdens and delays on power generators and are inappropriate for the liberalised market in which our companies now operate," he said.

The EU rules are designed for public sector and utility companies operating in protected markets, which might be inclined to favour local or national suppliers rather than procure goods and services on a competitive basis.

In practice, the procurement rules have put generators at significant commercial risk, particularly when timescales were tight, and added up to six months to the procurement process", said Mr Porter.

Shepherd+ Wedderburn partner Richard Cockburn, who led the AEP legal team, said the decision would have benefits for all companies operating in the sector. "Whilst the big companies will benefit from time savings, small to medium sized businesses across the country are also more likely to get involved in the tendering process as a result of the relaxation in the rules," he commented.

"We have been working with the AEP for two years on the project and one of the key elements in reaching this point has been the fact that the GB industry is now fully competitive."