Price cuts in the pipeline as gas supply opens up

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Competition in the gas market is more than hot air. For the first time, over the next year or so, households will have the freedom to switch from British Gas to a new supply company, shaving as much as 25 per cent off their bills.

For some 500,000 households in Devon, Cornwall and Somerset, competition - with plenty of teething troubles - has been a reality since last May. They have been the guinea pigs in a trial to test exactly how competition will work. And from tomorrow the big trials begin in earnest with a further 500,000 homes in Dorset and the Avon area, followed, from 7 March, by 1 million or so households in Kent and Sussex.

The industry may still be arguing about the timetable for the full national roll-out next year, but all the new suppliers are taking the trials very seriously indeed. All claim that they can undercut British Gas's tariffs, mainly by buying gas more cheaply wholesale.

In the South-west trial area, however, fewer homes have moved from British Gas than originally anticipated. So far, 87,000 customers have switched, just over 15 per cent of the total.

A steady stream of homes is deserting British Gas, but the floodgates have not opened. A poll by the Consumers' Association in the South-west showed that about half those questioned were happy with British Gas and would not consider a change, despite the savings. Evidence so far collected from advance marketing in Kent suggests that in the South-east there will be far more consumers deserting British Gas.

So how does it work? In the background is the splitting of British Gas into two separate companies later this month. One of the businesses, to be called Centrica, will supply gas to customers in competition with new entrants, though it will continue to use British Gas as its marketing brand.

The old British Gas will be renamed BG plc and will run TransCo, the pipeline system, as well as the gas meters and also the emergency call- out service which tackles leaks.

All of the suppliers, including Centrica, will pay BG to use the pipeline network on the same commercial terms.

The importance of this for the customers is that the basic system stays exactly the same. If you do choose to switch, you will not have to alter your pipes or your meter, and the gas you receive will be the same. Switching will not alter emergency call-outs or the way meters are read. It is the same principle as rival rail companies paying to run trains on the track network which is owned by Railtrack.

In any case, information is not likely to be lacking. The rival companies have already been campaigning to get the message across through posters, television and doorstep selling.

These doorstep activities have been the source of growing controversy, ignited when the Office of Fair Trading (OFT) attacked SwebGas, the supply arm of the electricity company in the South-west, for allegedly confronting people at home with some high-pressure sales techniques.

More recently Eastern Natural Gas, part of another power company, was criticised by Ofgas, the industry regulator, for its marketing activities in Kent. Its sales representatives, who are paid on commission,

had allegedly been telling customers that British Gas was changing its name to Eastern.

Ofgas, the OFT and the Gas Consumers Council, the statutory body representing customer interests, are attempting to thrash out a code of conduct for rival sales teams to follow.

But so far Ofgas has resisted the GCC's demands that a legally enforceable code be included in the operating licences of gas companies.

The main thing to bear in mind is that no one is being forced to move away from British Gas. And, given the bewildering array of propositions on offer, a wise policy would be to wait until you have a number of different tariffs from rival companies before making a decision.

If you do sign a contract during a door-to-door interview, you have a statutory right to change your mind afterwards. Householders have a seven-day cooling-off period.

The South-west trial exposed another glitch in the system. Customers who decide to switch to a different supplier will receive a final bill from British Gas, but in the South-west hundreds of homes have been charged too much in the changeover. In some cases, households paying their bills by direct debit had several hundred pounds removed from their accounts. British Gas has promised to pay back any interest lost through the mix- up.

Customers switching to another supplier may also find that if things do go wrong it could be difficult to identify where the problem lies. Your first stop should probably be your new supplier. But worries about leaks or metering may need to be directed to TransCo.

The examples shown here give some idea of the kinds of deals available. Other suppliers offering gas in Kent but not listed include Scottish Power, Midlands Electricity (selling as "laughing gas"), East Midlands Electricity, Southern Electric, and Total Gas Marketing (an offshoot of the French oil giant).

Reading all the bumf on the new deals may well make the Halifax flotation documents look like a postcard by comparison. As always with competition, the power to choose can be a burden as well as a release.

q Ofgas, the regulator, has leaflets on competition, and the Gas Consumers Council is working on a leaflet in conjunction with TransCo. Phone 0645 060708.

THE NEW GAS POWERS

Amerada Hess Gas (0500) 001100

Average saving on pounds 350 British Gas annual bill: pounds 58

Beacon (partly owned by electricity supplier Seeboard) (0500) 223355

Saving over pounds 350 BG bill: pounds 53

British Fuels (0800) 235236

Saving over pounds 350 BG bill: pounds 52

Calortex (run by the Calor gas company and Texaco): (0800) 443443

Saving over pounds 350 BG bill: pounds 57 to pounds 69

Eastern (part of the regional electricity group) (0345) 226226

Saving over pounds 350 BG bill: pounds 87.

Saga (the holidays and financial services group) (0800) 708 088

Saving over pounds 350 BG bill: pounds 75.52.

Check with suppliers whether these rates are fixed for any length of time. Unlike British Gas, these prices are not regulated. They could go up!

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