Failure of Centrica to clinch a deal with British Energy could result in a loss for the UK’s electricity consumers.

According to M&G, which holds large holdings in Centrica and BE, the deal would have been more useful both for BE shareholders and the country than the takeover by EDF.

The country has been more dependent on imports due to a steady decline in Britain’s North Sea gas production from its peak in 2000.

According to the National Grid’s estimates, the operators of electricity and transmission systems, Britain would have to import half of its supply capacity in winter either from pipe line gas via the Netherlands, Belgium and Norway or liquefied natural gas from Egypt and Qatar.

An industry expert described Britain’s position as a “swing consumer” of gas, which was left on tenterhooks and received only that much supply which remained balance after meeting full demand of the European requirements. He further elaborated by saying that this situation led to increased volatility in electricity prices, which were linked to gas, creating inflated energy costs for residential consumers and business.

M&G believed that the British Energy and Centrica alliance would have been much beneficial in securing long-term stable supply of gas for Britain. In return for stability, the new energy champion could have been allowed to earn more profits.

The Government, undeterred by the arguments, backed EDF considering French group as the best option, on basis of its financial strength and nuclear energy expertise.

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