Tuesday 20 October 2009

A Nice Bit of Legg ... Old Drew Reminisces

The unexpected and gratifying swathe being cut by Sir Thomas Legg through our troughing MPs reminds me of how Sir James McKinnon set about British Gas after privatisation, causing just as much surprise. Draw up a sandbag, my boys, swing the red lamp and harken to old Drew ...

Having been dragged kicking and screaming into privatisation, Denis Rooke, the irascible Chairman of British Gas (an unrepentant and brutal monopolist), extracted a concession. Rooke was assured (by arch dirigiste Peter Walker, the Energy Secretary of the day) that a patsy would be appointed to head the newly-constituted regulatory body Ofgas. McKinnon was duly appointed, a diminutive and superannuated accountant who, at first glance, looked the part.

Everything started well: McKinnon accepted an invitation to lunch with the BG Board in their private Thameside eyrie; and over the coffee, Rooke generously offered that, if McKinnon would simply like to forward drafts of his reports on BG to BG itself in advance of publication, they would do the fact-checking and editing for him and generally tidy everything up.

In response, McKinnon thanked Rooke for the splendid lunch . . . and asked him what principles would be used when allocating the cost of the repast to BG’s customers.

Things went downhill from there.

The story has a very happy ending, because over the coming years McKinnon (or St James, as we should call him) and his successor trussed up BG like a chicken and prepared it for dismemberment, as should have happened at the outset.

The dinosaur Rooke should perhaps have seen this coming, because the 'mild-mannered accountant' was a Glasgwegian terrier with the ego the size of a small planet, as evidenced by his first Ofgas annual report which contained 13 (thirteen) (sic) photos of himself !

What a man. I feared they'd broken the mould, but Legg is clearly following in his footsteps, and he's made a great start.



Anonymous said...

Shouldn't it be an ego 'the size' of a small planet rather than the ego of a small planet? I'm unsure what the ego of a small planet would be like but if it's right next to a really big planet....

Nick Drew said...

yup !

edit made, thanks

Bill Quango MP said...

That bloody Legg. Not one of us.
He has denied a half dozen fully legitimate claims like Fired earth tiling and gardener's lodgings refurbishment. However the Trough that I claimed for the paddock has had a "Obviously for personal use consistent with your duties" post it note attached.
The cheeky man.

Marchamont Needham said...

I met Denis Rooke once when I worked at the gas board pre-nationalisation.

A formidable character indeed.

Budgie said...

Unfortunately Legg's enquiry was required to omit 'phantom' mortgages and 'flipping' main homes. These were the worst thieving in my view.

Mark Wadsworth said...

Nick, off topic, but do you think that the gas suppliers run a cartel, i.e. that the prices they charge end-consumers are artificially high?

There's a lot of whining about their profits, but is that just a blip (like the super-profits they all made when oil was $150 a barrel) or is it structural?

Nick Drew said...

Mark, if by suppliers you mean the retailers, I genuinely don't (but I can't say more online)

the types of company involved, i.e. utilities, are the very ones who are most scrupulous when it comes to steering clear of anti-competitive behaviours

[you didn't mean Gazprom, Sonatrach, Qatargas et al, did you ?]

there are some cute behaviours in the UK gas traded market (i.e. wholesale, spot & forwards) where hundreds of players are in the game, including the big 6 retailers but also loads of traders, producers, hedge-funds etc etc.

but that's a game for big boys: again, nothing much more to be said online

as regards the retailers, I reckon that if Ofgem + Brown get too hot & heavy with them on their dealings in the residential sector, you'll see one of the Big 6 (who between them have 98% of the retail gas business and 100% of the electricity) dropping out - which will do no-one any good

[have also answered your comment on the earlier thread]

Nick Drew said...

Bill - my heart bleeds for you

Mr Needham - ye-es, 'formidable' ... de mortuis nil nisi bonum etc, so I'll leave it there (the b*****d)

(and his much vaunted project of converting the UK to North Sea Gas wasn't all that he wanted people to understand, either)

Budgie, let's see where he goes with this ...