Sales tactics of Scottish Power, Scottish and Southern Energy, EDF Energy and npower, are to be scrutinised by the regulator

Four of the UK's largest energy firms are being investigated over claims that they are misleading customers persuaded to switch supplier on their doorstep or over the phone.

Energy regulator Ofgem could fine the supply arms of npower, Scottish Power, Scottish and Southern Energy and EDF Energy up to 10% of their annual turnover if customers' complaints are upheld.

The latest probe comes despite new regulations being introduced in January which were supposed to clamp down on mis-selling by sales agents.

Householders are reporting that sales agents working for the energy suppliers are giving them misleading information and quotes which leave them worse off when they switch supplier.

Mis-selling in the energy industry is not new. An Ofgem investigation in 2008 found that 48% of gas customers and 42% of electricity customers were worse off after switching supplier on the doorstep.

Pushy doorstep sales agents are particularly guilty of misleading households, according to Consumer Focus. The watchdog said that the practice of doorstep selling should be banned if Ofgem's new guidelines continued to be flouted.

New figures from helpline Consumer Direct show that while the number of complaints has fallen since last year, about 200 cases of mis-selling are being reported each month.

Agents acting for all of the "Big Six" energy companies – which also include British Gas and E.ON – have all been reported for mis-selling. But the four targeted by Ofgem are the worst offenders, with Scottish Power having the most number of cases referred. About one out of every 100,000 of its customers has been making complaints this year.

Audrey Gallacher, head of energy at Consumer Focus, said: 'This is a welcome step by Ofgem to address years of customers getting a bad deal on energy prices on their doorstep. While many doorstep sales people will do a good job, the pay and rewards system continues to encourage mis-selling, despite years of regulation and voluntary initiatives. If better advice for customers and enforcement of the tougher rules doesn't end the flagrant abuse of this form of selling the big question will be whether it should be completely banned.'

The new initiative from Ofgem also comes at a crucial time for the regulator. The government recently launched a consultation into the future of the regulator, which is responsible for energy security, reducing carbon emissions and protecting consumers. Ofgem is likley to be stripped of this latter role if it is deemed to be in conflict with the rest of its remit.

Christine McGourty, director of Energy UK, which represents the leading gas and electricity companies, said: "The companies involved will collaborate with the Ofgem investigation and are awaiting further details from the regulator. Any sales agent in breach of the code will be struck off the approved energy sales register."

BT, Sainsbury and Centrica came out top in research into employee engagement conducted by Transparent Consulting as part of the Observer's Good Companies Guide

BT

The top-scoring FTSE 100 company in our employee engagement survey, BT won points for having reported on the issue for the past five years and for providing consistent data for the past three. Of course, a 147-page corporate social responsibility report does not automatically mean that BT is getting things right all the time, but it does show a willingness to be open about employee relations.

Giles Slinger at Transparent Consulting, who compiled the rankings, says: "Lots of information in itself does not make a company a high performer, but BT's reporting was also clear and consistent, giving a window on its efforts to evolve how it engages with employees."

The telecoms group has been collecting employee feedback increasingly regularly and putting more of an onus on managers to engage with their staff. As of this year, each manager gets a report on their team's aggregate responses to feedback schemes, and they are expected to work with the team to make improvements.

Sharon Darwent, head of employee engagement, stresses the need for action to be taken quickly and locally: "Our current survey closes this Wednesday. Ten days later, we'll deliver the results to the board and to every manager whose team has responded. We'll be looking at what actions have had the most impact on engagement and what can we replicate elsewhere."

But if proof were needed that well-developed engagement practices are by no means a guarantee of smooth industrial relations, BT has just emerged from tense pay negotiations with the Communication Workers Union, in which it narrowly averted a strike.

Employees may also share investors' concerns over boardroom pay at BT. The company's chief executive, Ian Livingston, saw his bonus more than triple last year, taking his total pay package, including shares, above £3m. His salary was to be increased by £50,000 to £900,000 this year but he pledged to limit the rise to 2%, equivalent to what is being offered to BT's staff, and to donate the rest to charity.

The latest evidence suggests that BT remains an attractive employer for young people; last week it reported that it had nearly 24,000 applications for the 221 apprenticeship places it is offering this year - more than 100 applications per place.

Sainsbury

If you are looking for an employer that lets you put your suggestions for improving the company direct to the chief executive and guarantees a reply, you could do worse than J Sainsbury. Under the supermarket's "Tell Justin" scheme, every letter sent to Justin King is promised a response. This year Sainsbury's reported its 30,000th communication from staff.

The grocer comfortably made it into the top 30 in the employee-engagement charts on the back of frequent consultations with its workforce. It has been praised not only for letting people put forward ideas but for evidence that management acts on those suggestions – from the observation that there was a demand for alcohol-free red wine, to the idea of putting signs in car parks reminding customers to bring in their old carrier bags.

Frequent meetings may not be to everyone's taste, but Sainsbury's employees – or, as the retailer prefers to call them, "colleagues" – can talk to managers at a "daily huddle", as well as during weekly updates. Senior managers and executives are expected to make weekly visits to stores and to listen to frontline staff. King also writes a monthly letter to all colleagues.

Sainsbury's has tapped into new media to get employee feedback, with an online community called the Colleague Panel. It reports on corporate social responsibility issues on a quarterly basis alongside its regular financial updates to the City.

The company's performance is part of a wider pattern identified in our review of employee engagement policies. Transparent Consulting's Slinger says: "Companies and sectors that prioritise customer satisfaction are also the ones that seem to find it worthwhile to give attention to employee engagement."

In Sainsbury's case, feedback from staff and customers appears to be closely aligned. The company conducts monthly customer surveys, as well as weekly checks, to find out "what's on the customer's mind".

Where Sainsbury's falls down is that it has gaps in its reporting, providing only one year's hard data on employee engagement in its annual report.

Centrica

The group behind British Gas combines employee engagement with its efforts to ensure customer satisfaction by feeding clients' opinions about its service back to its teams of workers. Centrica also carries out half-yearly appraisals that are linked to bonuses and runs a company-wide employee survey.

Staff at many firms complain that such polls are pointless if no follow-up action is taken but Centrica insists that it does act on what its workers have to say.

Employee engagement manager Lindsey Oliver says: "Our September 2009 survey told us we were falling down in the areas of recognition and feeling valued. People weren't saying thank you enough. So by December we had designed and put in place a formal recognition programme. We put stands in and around the offices with thank-you cards that people can give to the person who has helped. It's a small thing, but it makes a big difference."

In June this year, Centrica asked its staff the same questions about feeling valued, and scores jumped.

While the debate continues over whether employee engagement can actually make measurable changes to business performance, Centrica is hoping its latest approach will do just that.

"This year, for the first time, we're going to tie our teams' employee engagement scores back to their customer feedback," says Oliver. "We'll also cross-check against attrition [employee turnover], absence and performance. We'll get the results in November. It's a big step, and it's very exciting. I think we're going to be able to put a true business value on employee engagement."

Centrica already estimates that good relations with employees saved it more than £41m last year because it had to hire fewer people to fill vacancies as attrition rates almost halved.

Still, for all its engagement projects, it is worth bearing in mind that Centrica may not have the happiest workforce in Britain, given that in 2009 alone it made more than 1,000 people redundant.

A plus point for prospective parents, on the other hand, is Centrica's maternity policy, which offers most of its female staff six months' leave on full pay – much longer than at many other UK employers.

• British power provider to merge with France's GDF Suez
• Group to be world's largest power company by revenues

Another UK power firm was poised for foreign ownership today after International Power agreed a merger with France's GDF Suez.

International Power, which owns UK assets including the giant coal-fired station at Rugeley in Staffordshire, will be 70% owned by GDF under the deal to create one of the world's biggest independent power generators.

The proposed tie-up comes after British Energy was bought by another French company, EDF, for £12.5bn in 2008. It leaves Britain owning just two independent energy producers in Centrica and Scottish & Southern Energy.

The new business, which will combine International Power's 45 power stations and the international assets of GDF, will continue to be listed on the London Stock Exchange with GDF as its majority shareholder.

GDF will pay a special dividend of about 90p a share, worth £1.4bn, to International Power's shareholders as part of the deal, which is structured as a reverse takeover.

As well as Rugeley, which powers the equivalent of half a million homes, International Power is the majority owner of the First Hydro hydroelectric plants at Dinorwig and Ffestiniog in North Wales and the gas-fired station at Saltend, near Hull.

The company also reported half-year profits today of £524m, a drop of 5% on a year earlier after strong contributions from operations in Australia and the Middle East were offset by weaker profits in North America.

The Europe division, which includes its UK operations, saw underlying profits improve 10% after a "significantly" improved performance at Rugeley.

An improved credit rating following today's deal will mean International Power pays less for its debt and will find it easier to fund expansion.

The enlarged company, which will continue to be led by chief executive Philip Cox, is expected to generate cost savings of around £165m a year.

GDF is 35%-owned by the French government and is several times larger than International Power's current market capitalisation of around £5.7bn.

The French company said the tie-up will make it the world's largest power company by revenues and second largest by generation capacity.

• GDF Suez deal will create one of world's biggest power groups
• International Power name and stock market listing to be kept

International Power is expected to become the latest British company to be taken over by a foreign competitor this week.

The French state-controlled energy firm GDF Suez has been in talks with the FTSE 100 independent power producer for months.

Barring any last-minute hitches, the deal should be confirmed on Tuesday when both companies report half-year results. The deal will create one of the world's biggest power groups. International Power's 45 power stations, including the six it owns in Britain, will be combined with those GDF owns outside Europe.

The generating capacity of the enlarged group – which will keep the name International Power – will double as a result. GDF will own about two-thirds of the new company, with the rest being traded on the London stock exchange.

Shareholders in the British company will receive a special one-off cash payout from GDF of about £1.2bn to sweeten the deal and secure their support.

The standalone generator has long been hampered by not being able to compete with integrated energy groups like GDF.

The deal will take place before any rules are introduced which could make takeovers more difficult. Following the controversial takeover of Cadbury by US food group Kraft, business secretary Vince Cable has called for changes in the takeover code to make it harder for short-term investors such as hedge funds to trigger a deal which may not be in the long-term interest of either company. International Power's takeover would not fall into this category but Britain's liberal takeover regime is coming under increasing scrutiny. Some politicians and unions fear that British companies with foreign owners are less likely to base research and development activities in the UK in future for example.

Hong Kong billionaire adds world's second-largest utility to UK holdings

Hong Kong billionaire Li Ka-shing is to buy EDF's UK electricity networks for £5.8bn, giving him ownership of grids supplying a third of the country's population.

The tycoon's investment vehicles Cheung Kong Infrastructure (CKI) and Hongkong Electric will buy three British electricity distribution networks and a private power networks business from EDF, the world's second-largest utility.

They supply power from the high-voltage grid to 20 million people in London and England's east and southeast, and also to the London Underground, Heathrow airport and the Channel tunnel.

Li beat competition from a rival consortium that included the Macquarie Group of Australia, Canada Pension Plan and the Abu Dhabi Investment Authority as the sale dragged on for a year. The purchase is one of the biggest deals in Europe by a north Asian company but ranks behind the $14.3bn (£9bn)m Chinalco paid for a 12% stake in Rio Tinto two years ago.

His name may not be well known to Brits, but the UK brands octagenarian Li's empire owns – and has owned – certainly are. After building Hutchison Whampoa into a major industrial holding company, he went on to revolutionise the UK's mobile phone market in the 1990s with the creation of Orange and earned a reputation as a dealmaker when he sold it for $14.6bn in 1999.

Hoping to repeat the trick, Hutchison came back into the UK's mobile market a few years later with another mobile operator, 3. Hutchison also owns Superdrug, three of Britain's biggest ports, including Felixstowe and Harwich, and Cambridge Water. Although 3 has yet to make a profit for Li, he has made big profits elsewhere.

Having invested about $2bn in the business, he sold his stake in Indian telecoms company Hutchison Essar to Vodafone for $11.1bn three years ago. In the last Forbes rich list, Li's personal wealth was estimated at $16.2bn. He is also Asia's biggest investor in Britain, but has a no-frills lifestyle, being a plain dresser and prodigious philanthropist. The purchase caps a process that has dragged on for more than a year, delayed by a change in EDF management, British regulatory rulings, and difficulties with pension trustees. But the final price represents a handsome improvement on the €5bn (£4.2bn) target EDF set itself for the disposal.

Analysts said the deal would double CKI's presence in the United Kingdom, helping to overcome its limited room for domestic growth. CKI already invests in Britain's gas and water industries and owns utility businesses in Australia, Canada and New Zealand.

International Power has reopened talks with France's GDF Suez about a possible multi-billion pound tie-up between the two power companies. This could reignite the debate over foreign ownership of British companies, following a spate of takeover deals, notably Kraft's swoop on Cadbury and Deutsche Bahn's acquisition of Arriva.

Engineering

• Tomkins has received a bid approach from a Canadian consortium, the latest in a series of deals in engineering-related sectors.

• Chloride, the uninterruptable power supply specialist, went to Emerson of the US for £997m, following a tussle with Swiss rival ABB.

• In June, San Francisco-based URS won the takeover battle for British engineering consultancy firm Scott Wilson, which is a key contractor on London's Crossrail project.

In May, the Office of Fair Trading announced a massive stock-take of the UK's public infrastructure – ports, airports, trains, utilities and car parks – in order to examine how they have affected competition and consumers. Over the past decade, a slew of British infrastructure assets have changed hands. Here are some more examples:

Transport

• Bus and train operator Arriva sold to Deutsche Bahn in April 2010

• Airport operator BAA taken over by Spain's Ferrovial in 2006

• P&O Ports sold to Dubai Ports World in 2005

• Associated British Ports bought by a consortium led by Goldman Sachs in 2006

Communications

• Airwave, the UK's public safety communications network, acquired by Australian bank Macquarie from Telefonica in 2007
• Macquarie also owns broadcast and mobile communications business Arqiva

Energy

• British Energy became part of French group EDF in 2008

• npower has been owned by Germany's RWE for over eight years

• Powergen was snapped up by Germany's E.ON almost a decade ago

• Scottish Power became part of Spain's Iberdrola in 2006

Water

• Thames Water was snapped up by Macquarie in 2006

• The Greenslade financial consortium, including JP Morgan, bought Southern Water in 2007

Car parks

• 3i sold part of NCP, the UK's largest car park business, to Macquarie in 2007

BT signs partnership to bid for work in government's installation of 28m smart energy meters in homes and small businesses over the next decade

BT is launching a bid to take part in the multi-billion pound rollout of smart energy meters across the country.

BT will today announce a partnership with broadcasting firm Arqiva and Detica, a branch of BAE Systems. The three companies hope to persuade the government that they should build and operate a new nationwide long-range radio network to communicate with the intelligent meters that are being installed in Britain's 28 million homes and small businesses over the next decade.

This pitches BT into a battle with mobile firms such as Vodafone and Orange, who also want to share in a project estimated to be worth upwards of £7bn.

Smart meters will use telecommunications to deliver important environmental benefits and so BT is determined to be at the heart of the project, said Olivia Garfield, BT Group strategy director.

Under BT's plan, smart meters installed by electricity, gas and water providers would be linked to a new, secure wireless network running across Arqiva's radio spectrum, which is currently used to transmit TV and radio signals. Detica will provide security measures, while BT will run the project.

The government wants smart meters to be rolled out nationally by 2020. They will allow customers to better track their energy use, which should help to cut consumption and carbon emissions.

The long-term goal is to create a smart grid where electricity demand can be closely monitored, allowing householders to run power-hungry devices such as washing machines at off-peak times.

Utility firms are already testing and deploying smart meters, and the mobile operators appear to have made the early running in the race to work with them. Vodafone is providing the network access to British Gas as it aims to install two million units by 2012, while Orange began trials with nPower and Scottish and Southern Energy this year.

BT and its partners, though, argue that long-range radio will provide wider coverage and better reception indoors than mobile phone networks, which would be useful for where meters are installed in remote locations or in basements.

A communications network designed to meet the different needs of all of Britain's utilities – electricity, gas and water – must be able to deliver universal connectivity and long-term resilience, said John Cronin, managing director for Arqiva Wireless Access.

The government is expected to publish its plans for smart meter deployment in the next few weeks.

• Shares jump 10% on news of talks with France's GDF Suez
• International Power has six plants in UK
• Possible foreign takeover follows outcry over Kraft-Cadbury

International Power has reopened talks with France's GDF Suez about a possible multi-billion pound tie-up between the two power companies.

Under the terms of the deal being discussed, GDF would become a majority shareholder in International Power, which runs six power plants in Britain and produces electricity for more than 4m households. Both companies would merge their international operations outside Europe as well as certain assets in the UK and Turkey to create an enlarged International Power that would be listed on the London Stock Exchange – a reverse takeover of International Power.

Shares in International Power rose 10% in early trading to 345.8p, valuing the company at just under £5.3bn.

A takeover by the French group would test the new coalition government's attitude to the takeover of British companies by foreign rivals following the public outcry over Kraft's swoop on Cadbury this year.

It also poses questions about the security of the UK's energy supplies as GDF is 35% owned by the French government. International Power's plants would be the latest in a string of British infrastructure assets to enter foreign hands.

The Office of Fair Trading announced in May that it was launching a comprehensive stock-take of the country's economic infrastructure, to investigate whether consumers are being ripped off as many of these businesses have changed owner in the past decade.

Many utility companies are now owned by foreign groups. Few of the UK's household energy suppliers – Centrica and Scottish and Southern Energy – remain in British ownership, just over a decade after the market was opened up to full competition.

Almost half of all UK-listed companies targeted in takeover bids in the past two years have been bought by overseas buyers, reigniting the debate over foreign ownership of British firms. Two years ago, for instance, French energy giant EDF agreed to buy nuclear power station operator British Energy in a £12.4bn deal.

International Power and GDF broke off talks at the start of the year about merging some of their businesses, but since then rumours have swirled that the French group might rekindle its interest in its British rival.

UN's Clean Development Mechanism to use European carbon offset credits to subsidise 20 'efficient' coal plants in India and China

The UN is set to channel billions of pounds of public money from rich countries to giant energy companies to build 20 heavily polluting coal-fired power plants on the basis that they will emit less carbon dioxide than older ones.

Data seen by the Guardian shows that 12 companies have applied to the UN for hundreds of millions of emission reduction credits to subsidise "efficient" coal-fired power stations in China and India. Many of the plants would be paid for with carbon offsets bought by British and European companies in lieu of cutting their own emissions.

If, as expected, the power company applications are approved by the UN Framework Convention on Climate Change (UNFCCC), they will earn around £3.5bn at current carbon market prices. This would make the UN body set up to promote clean energy and reduce global climate emissions one of the world's largest provider of funds for new coal burning.

The rush by companies to take advantage of the UN's Clean Development Mechanism (CDM) subsidies follows the successful application for credits by the Indian Adani coal group for two large power stations at Mundra in Gujarat, India. Adani will earn around £25m a year for the lifetime of its power stations in return for using "super-critical" technology, which burns the coal at lower temperatures and emits up to 30% less carbon dioxide than conventional power plants.

An Adani company spokesman said that its application had been approved by the UN only after a "complex and gruelling" evaluation process by national government, independent inspectors and a UN committee.

Others companies are now examining if they qualify. Eskom, the giant South African coal mining company controversially loaned £3.75bn by the World Bank in April to build what one of the largest coal-fired power stations in the world, has said it will apply for emission reduction credits. If built, the Medupi plant will emit nearly 25m tonnes of CO2 a year, more than the national output of 115 individual countries.

If Medupi is allowed to sell carbon offsets to Britain and other rich countries, it will be able to discount 6.5m tonnes of CO2 every year for 10 years, earning it tens of millions of pounds. It would be able offset all the emissions from a major new coal power station in the UK, effectively allowing the British government to meet its carbon-reduction targets by subsidising a plant in South Africa that would have been built anyway.

Eva Filzmoser, director of CDM-watch said: "It's completely unacceptable for the UN to keep issuing an inflated number of bogus credits that create vast profits for carbon trading groups and chemical companies. If the UN wishes to avoid irreparable damage to its reputation and show that is truly serious about climate mitigation, it must put the current methodology on hold with immediate effect and halt issuing credits until the methodology is revised."

David Abbass, a Unfccc spokesman, said the CDM has features that prevent projects supported by the scheme from inadvertently prolonging fossil fuel use or competing against renewable energy sources. "Fossil fuel will be a part of the energy mix for many years to come. It makes sense that the CDM should be used to reduce the emissions associated with that fossil fuel use."

"The methodology has a phase-out feature that limits the number of certified emission reduction credits that can be earned. As well, the number of projects eligible in a given country is limited, based on a percentage of the fossil fuel, covered by the project, used in the country."

The news comes at the same time as a report into the EU Emissions Trading Scheme (ETS) by the campaign group Sandbag. In 2009, European companies bought €860m of international offsets to comply with caps imposed by the ETS, but the report found that companies were directly subsidising competing industries in developing countries. Sandbag says this undermines claims by these companies that caps on their emissions force business to countries outside the EU and so lead to "carbon leakage". The largest purchaser of offsets, for example - Salzgitter's Glock Satzgitter steel production plant - bought 40,000 offsets from an Indian steel project.

"Frustratingly, it seems that EU installations seem to have a greater incentive to fund abatement projects amongst their competitors rather than invest in these improvements themselves," said Sandbag founder and director, Bryony Worthington, "While it is perfectly legal and on one level economically rational to do this, it begs the question of why companies would choose to send a direct subsidy to their international competitors if fears of carbon leakage were so pronounced."

Energy regulator Ofgem is to introduce measures designed to help householders get the most out of the utilities market

Householders will receive improved information on their regular bills as well as on the annual cost of their gas and electricity, under new rules from the energy regulator that come into force on Thursday.

All households will receive annual statements between 1 July and 1 December, depending on their energy supplier's billing cycle. The statements will show the tariff you are on, how much energy you have used in the past 12 months (when you have been with your supplier for at least a year), and the estimated cost in pounds for the following year – assuming you stayed on the same tariff using the same amount of energy and there were no price changes during that time.

The statements will show any premiums or discounts that you receive – such as paying by direct debit – and any that you could get, and will also contain advice on how to switch supplier. Energy companies will have to include the same information, minus the advice on switching and the details on premiums and discounts, on regular bills from this week.

The statements and improved bills are being introduced as part of a raft of measures from the energy regulator, Ofgem, designed to help householders get the most out of the energy market. Other rules, including new standards of conduct that mean that, for example, suppliers must not sell a customer a product or service that they do not fully understand or that is inappropriate, were introduced in October last year. Meanwhile, in January, a requirement that door-to-door energy salesmen provide a written statement came into force.

"Annual statements are going to be very important in terms of helping consumers manage both their finances and energy better. The statements will provide households with all the information that they need to check their current rate and energy plan, and make it easier for them to go online and save money by switching," says Ann Robinson, director of consumer policy at uSwitch.com.

"But it remains to be seen how energy companies will present this information and how consumer-friendly these statements will be. If customers are to benefit then it is vital that each company makes their statement as clear and straightforward as possible. Consumers have struggled to understand energy bills in the past; if suppliers get these statements right then that issue could be laid to rest."

A survey by uSwitch last year found that 75% of people find their energy bills confusing, compared to 27% who found bank and building society statements puzzling. Consumer body Which? is in the process of comparing the new bills from each of the energy suppliers to see just how clear they are, and will report on this later this week.

"It's good to see bills getting better but a shame that Ofgem had to force suppliers to provide information as basic as the name of the tariff," says Which? energy campaigner Dr Fiona Cochrane. "We want to see suppliers go further than the new Ofgem rules require by including information such as summary boxes that include all of the key information about the tariff."

We've been open. We expect to pay the full costs of decommissioning power stations

Your article on the costs associated with nuclear reactors addresses a fundamental question about how we de-carbonise our energy supply, and who pays (Nuclear waste offer 'has hidden subsidy', 3 June). But the suggestion that EDF Energy was engaged in "behind-the scenes lobbying" to gain a "hidden subsidy" is wrong.

We were responding to an open pre-consultation by government. This invited views from all parties, including ourselves and NGOs, on the price for radioactive waste disposal. We work hard to be part of the debate and recently set out our commitment to transparency. We have always been open that we expect to pay the full costs of decommissioning and our full share of the waste management and disposal costs from our new-build programme.

You report that there will be "further scrutiny on the government's promise that there will be no subsidy for nuclear power". But we have not asked for subsidy for new nuclear in the UK. We believe it can be delivered without subsidy, in line with the coalition government agreement. However, no electricity generator – of nuclear, wind or other source – can invest without a robust policy framework.

As your article suggests, central to this is the mechanism to make sure nuclear liabilities from new-build will be met. We need to avoid past mistakes and put in place a funding mechanism to make sure enough money is set aside by the operator during the generating lifetime of the plant to cover liabilities.

These funds should be ringfenced so they can be used only for this purpose and so the taxpayer is protected from picking up the bill. This way, there will be funds available to cover the liabilities when ownership of the waste passes to government, which we believe should happen after decommissioning.

The financial and legal arrangements to achieve this are complex, and will need ongoing dialogue between government, industry, NGOs and others. One important element is the government's proposal to set a fixed price for waste disposal. This would carry a premium to protect taxpayers against the risk that future costs could be higher than anticipated. We agree with these principles.

You report that "last year the government proposed charging a very high fixed unit price for waste disposal". In our submission we argued that the fixed price can be set more accurately once these disposal plans are more developed. Britain's waste disposal strategy, like others globally, is via a geological repository. The government is working on the location, design and cost of this.

As you report, "the consultation is continuing". We recognise the need for ongoing debate. Last week we launched our sustainability commitments, one of the largest such initiatives from any UK company. These include measurable pledges on how we will responsibly deliver low-carbon nuclear power.

Foremost is a commitment to be open and transparent in our nuclear business, and to demonstrate that we can be trusted. We expect the government and the public to hold us to these promises.

Ayrshire Power's proposal to build the £3bn carbon capture plant contains 'serious errors', green groups say

The power firm hoping to build the UK's first new coal-fired power station equipped with carbon capture technology has been accused of making a series of "sloppy" and "serious errors" in its planning application.

Environmentalists claim the mistakes in Ayrshire Power's proposal to build a £3bn 1,800MW coal-fired plant close to Hunterston nuclear power station raise significant questions about the credibility of its plans.

Ayrshire Power, solely owned by the Manchester-based property and airports firm Peel Holdings, claims that 25% of the new plant's CO2 emissions will be caught by its carbon capture and storage (CCS) equipment when it begins operations.

The first power station application to be made in Britain under tight new UK and Scottish government climate change regulations, it aims to have nearly all of its CO₂ emissions (90%) captured by CCS within five years of the technology being proven.

However, Dr Richard Dixon, the director of WWF Scotland, said his analysis of the planning application suggested that Hunterston would only initially capture up to 22% of its carbon emissions.

The documents were surprisingly "sloppy", he said, and suggested that Ayrshire Power's application was now less credible after Dong, the Danish energy giant, withdrew from the Hunterston consortium last year, citing the drop in demand for power due to the recession.

While it owns windfarms and 24% of mining company UK Coal, Peel Holdings had never built a power station and is continuing to use the designs for Hunterston developed by Dong. "Its technical credibility has gone right out of the window," Dixon said.

The firm's project description states it will capture 327MW equivalent of CO2 when it first starts operation, while the electricity sent to the grid would total 1,625MW - 20.1%.

There were other errors in the planning application, Dixon said. It mistook kilograms for grams in its "CO2 emissions study". In one passage, it gave the carbon intensity of overall UK electricity supplies as 560kg per kilowatt hour rather than 560g/kwh. It also gave confusing and apparently contradictory figures on the number of bulk container ships bringing in coal and biomass fuel from abroad.

It said there were either 40 ships or 40 shipping movements involving biomass fuel. Dixon said a shipping movement was a one-way trip either in or out of port, so 40 shipping movements would involve just 20 ships. On coal deliveries, it talked about 40 ships docking each year in one part of the document, leading to 80 shipping movements, and 40 shipping movements in another.

Dixon said: "It rather suggests that this company isn't credible and shouldn't be allowed to build a £3bn power station."

Duncan McLaren, the chief executive of Friends of the Earth Scotland, said

it was very surprising the errors identified in the application had not been picked up by Scottish government officials in the "gatekeeping" document verification stage before Ayrshire Power filed its planning application.

"It's surely indicative that this is a small organisation relying on other people for the data and figures," he said. "If this application shows such gross errors, then the Scottish government should've just said 'go away'."

Ayrshire Power refused to respond directly to these criticisms, but said in a statement it was "100% committed to the use of carbon capture and storage technology."

The statement added: "From day one the power station will have a fully operational demonstration carbon capture and storage unit in place which will result in at least 25% fewer carbon dioxide emissions. Once fully fitted with CCS technology the power station will be capable of capturing 90% of the carbon dioxide it produces. This will put Scotland at the forefront of carbon reduction and deliver safe, secure energy supplies for generations to come."

Analysts expect US rival Emerson to return to the table with a higher offer for the British power equipment company

A bidding contest is looming over Chloride after the power equipment company agreed to be bought by Swiss engineering firm ABB for £860m.

The deal follows Chloride's rejection of an offer from American rival Emerson Electric, which had valued the British company at £723m.

But analysts and the markets expect Emerson to return to the table with a higher offer. Shares in Chloride were trading at 344p today, significantly higher than the 325p-a-share offer from ABB. Emerson has had Chloride in its sights for more than two years, and first approached the company with a 270p-a-share bid in 2008. Its latest offer was pitched at 275p and Emerson boss David Farr was last week in London canvassing Chloride investors, to gauge their support.

Chloride, which makes emergency power equipment for the likes of London Underground and Heathrow airport, will become the latest British company to fall to a foreign owner, at a time when the issue has become politically charged. In the wake of the takeover of Cadbury by Kraft and the broken promise to keep its Somerdale factory open, unions and politicians have been exerting pressure on the government to make it more difficult for overseas firms to buy British assets.

The Takeover Panel will publish the results of a consultation on the rules governing acquisitions at the end of next month.

ABB said Chloride would become the global centre for its uninterruptible power supplies division. Chloride's traditional customers were in heavy industry and utilities but the increasing reliance on technology in other sectors has broadened its customer base and it now ensures the lights stay on at EDF Energy, HSBC, Sainsbury's and BP. It has also grown rapidly in emerging markets, as the demand for energy has led to increasing power cuts. Chloride last month reported profits for the year of £41m.

ABB, which provides power systems and helps industrial firms to automate processes, already employs around 2,300 people in Britain, part of a global workforce of 117,000.

Joe Hogan, the ABB chief executive, said his company had been talking to Chloride about a potential deal for 18 months. "Obviously, Emerson putting them into play forced us to move faster than we would have, but we had been talking to them for some time," he said.

There was speculation that other bidders could still emerge, including Schneider Electric and Eaton, a competitor to Emerson in the United States.

• Reactors builder won big concessions on key issues
• Rethink on costs is in effect a subsidy, says Greenpeace

The nuclear industry is being offered what campaigners claim is a taxpayer subsidy on the disposal costs of waste from new reactors following a secret lobbying campaign, the Guardian has learned.

The revelation will put further scrutiny on the new government's promise that there will be no subsidy for nuclear power. Liberal Democrat Chris Huhne, the new energy and climate change secretary of state, admitted to the Guardian this week that the government already faces a £4bn funding black hole over existing radioactive waste.

The previous government had planned to charge the industry a high, fixed, disposal levy tied to the amount of nuclear waste it produced. It had also originally told the industry that responsibility for the waste should be transferred to the state only once the waste had been disposed of, at least 110 years from the start of a reactor's operations. Both proposals were deeply unpopular with the industry.

In March, the Labour government published revised proposals that made significant concessions on both issues. Consultation on the plans will conclude this month. A spokesman for the energy department said the consultation was continuing but declined to comment on whether the new government would take a different approach to the previous administration.

Documents released under a freedom of information request reveal the extent of behind-the-scenes lobbying last year in Whitehall by EDF Energy, the French firm that wants to build the first new reactors in the UK for decades. The lobbying focused on the two key proposals which were revised in March.

In one meeting with officials from the energy department in July last year, EDF Energy's presentation concluded that the original proposals were "non-acceptable" [sic]. In another meeting in October, the presentation warned: "At current levels, [the proposed] fixed price model will significantly impact the economics of NNB [nuclear new build] in the UK and could make an investment unattractive." In a letter in July to the department, the company even warned that the cost calculations could "be open to challenge in future on the grounds of prudency".

A spokesman from Greenpeace said: "These documents blow EDF's claim that they won't need any subsidies for new nuclear clean out of the water. They know full well that the economics of nuclear don't stack up and that new reactors will only ever happen if the British taxpayer is forced yet again to carry the atomic can."

In an effort to protect the taxpayer from having to pick up the tab, last year the government proposed charging a very high fixed unit price for waste disposal. But EDF argued it was much too high. The revised proposal would allow operators to set aside a much lower amount for the first 10 years of a reactor's operation.

The original plan had also been for the government to assume title – or responsibility – for the waste once it had been disposed of in a new underground storage facility, which has yet to be built. This transfer – and the transfer of funds by operators to the government to cover the costs – would take place after 110 years of the reactor beginning operation, at the earliest. But EDF said this would involve too long-term an investment risk, as the returns from their waste disposal fund would have to cover the costs when it matured over a century later. The consultation instead proposed the transfer taking place once decommissioning has been completed, after around 60 years.

An energy department spokesman said: "The allegation that outcomes of the consultation have been pre-agreed with industry have no foundation. The coalition has committed that there will be no public subsidy for new nuclear."

Industries that stand to benefit from the European emissions trading scheme must counter arguments that higher targets mean greater cost

Analysis from the European commission today that sets out options to move beyond a 20% cut by 2020 bears the scars of an uncomfortable fight between different factions.

Those who have yet to accept the fact that weaning ourselves off imported fossil fuels and investing in a new clean energy system will boost the European economy have had their knives out. Although they haven't been able to challenge the fundamental analysis that it is now much cheaper and easier to reach more challenging targets, they have been able to substantially water down the document and add some special pleading on behalf of the old industries of Europe.

We are told the recession means there is less money available to invest in the measures that will be needed to meet reduction targets. But the reality is that thanks to the existence of the European emissions trading scheme (ETS), a new source of windfall profits has grown up in Europe that benefits precisely the same heavy industries that are vociferously opposing progress. Emissions in Europe are now capped and the permits issued to enable compliance with these caps are now assets with a tradeable value.

These assets have been unequally distributed, giving heavy industry generous surpluses while the power sector has been given substantially fewer than it needs. Falling emissions due to the recession means that companies across Europe have been quietly amassing large volumes of surplus permits that by 2012 could be worth around €18bn at today's prices. Of course this fact is quietly ignored by industry lobbies.

The other complaint seems to be that in these times of financial difficulty we should not be contemplating further burdens on the economy. Superficially, this sounds like a persuasive argument – except that it is woefully simplistic. The "cost" imposed by taking action to climate change is recycled back into the economy. The sale of permits to industry raises revenue for investment in new infrastructure, technologies and jobs. Energy prices will rise to fund this investment, but this also encourages investment in increased resource productivity that will have both short and long-term benefits for the economy.

If there is one issue that the industry lobby should be agitated about it is the massive flow of finance that currently leaves Europe to be received by chemical companies in India and China for cheap emissions offset projects. For this to continue as the primary means by which we meet our targets is clearly not sensible. The commission's paper raises the idea of changing these rules and this is a welcome acknowledgement that the short-term benefit of access to cheap overseas reductions is not in our long-term interests since it diverts cash away from much-needed investment here.

Within the paper there are other very sensible suggestions for how a move to 30% can be achieved – such as removing 1.4bn permits from the currently oversupplied ETS. This decision needs to be decoupled from the highly political debate about the equivalence of action in other countries and made unilaterally to rescue the scheme from irrelevancy.

Over 70% of all installations now have more permits than they need – continued high allocations will all but kill the need for investment in the EU until 2017 at the earliest. It would be a great shame if knee-jerk reactions against anything that ushers in change prevents the recommendations in today's paper from being adopted. All those industries that stand to benefit from the proposals must help to counter the arguments that defend the status quo.

• Bryony Worthington is the founder of sandbag.org.uk, a not-for-profit organisation seeking to engage civil society in improving emissions trading policy