UK: OFGEM, electricity companies and directors' conflicts of interests

The UK's Observer newspaper has reported that the electricity regulator - OFGEM - is investigating the conflicts of interest faced by directors. According to the news report, OFGEM:

...is concerned that directors of leveraged utilities firms are also directors of parent companies, creating a potential conflict of interest. John Reynolds, of independent investment bank Reynolds Partners, who has researched the subject, says: 'Conflicted directors are pulled in two directions: they must ensure that the operating company provides a proper service to customers; and they must make certain that the holding company services its debts'. Ofgem director Steve Smith says: 'We are aware of the issue and are looking at it within the wider context of a review into the way utilities are run'. "

NB: English company law does not grant a corporate group a legal identity separate from those of the individual group companies. Each company has its own separate legal personality and it is to these individual companies that directors owe their legal duties.