British Gas accused over review

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The Independent Online
British Gas has come under attack for hampering a review of controls on its pipelines by the industry watchdog, Ofgas, writes Mary Fagan. Consultants to Ofgas have accused the company's pipeline arm, TransCo, of delays in providing the necessary information and of "gaps" in the data when it arrives.

The review of the pipes is central to the development of competition as it will dictate how much TransCo will in future be able to charge rival suppliers to use the pipes. The problems encountered with TransCo are revealed in a progress report issued by Ofgas yesterday.

The regulator also confirmed that Clare Spottiswoode, the director-general of Ofgas, is considering scrapping the existing price-cap system and introducing some form of profit-sharing scheme.

Coopers & Lybrand, which is advising Ofgas, said: "Our view of the [TransCo] responses is that typically they have arrived later than the date originally requested, and that the information presented is incomplete and of variable quality."

The consultants also expressed concern that TransCo has said that some of the information is still "preliminary" and may need to be changed "in the light of further analysis".

Worries over TransCo's replies to questions have also been raised by Ofgas's other advisers on the review, WS Atkins. The report says: "The submission of data so far is of indifferent quality and does give rise to some concern as to the robustness of planned capital expenditure estimates. There seems to be little evidence of an overall strategic approach to long-term asset management planning."

A spokesman for the pipeline company said that the criticism was premature and hit back at Ofgas for delays in issuing the original consultaton on the review. He said: "This should not be seen as a tussle between us and Ofgas. We have provided 400 documents and there will be more meetings soon to resolve outstanding issues." However, he added: "There is some information which we cannot supply because we do not know the direction and shape which Ofgas wants the industry to take."

The debacle comes just weeks after TransCo was forced to back down over planned increases in pipeline charges after an outcry from rival suppliers. Ms Spottiswoode told the company to come up with fresh proposals and warned that any increase would have to be proven to be justified.

Other gas suppliers, including North Sea producers and electricity firms, said the planned price increases would have squeezed margins enough to put some people out of the market. They privately accuse TransCo of using its monopoly power to hold back competition.

Earlier this week British Gas's chairman, Richard Giordano, said there was "doubt" as to whether the Government's planned introduction of competition in domestic supply next April could be met. He warned that delays with legislation left too little time for proper testing of the systems. But the Government is adamant that the scheme, initially involving 500,000 homes in the South-west, should not be delayed.