British Gas could lose 10% of customers on day one

British Gas is likely to lose 10 per cent of its customers on the first day of trials of domestic competition, starting in the South of England from next month, according to the latest forecast from one of the leading independent suppliers.

Calortex, a joint venture formed by Calor and Texaco, said it had analysed advance contracts signed by its marketing team which showed the interest in moving from British Gas was much stronger than in the first competition trial, which began in the South-west last May.

In this earlier trial about 6 per cent of customers switched on the first day through advance orders, a figure which disappointed some suppliers.

The forecast would mean British Gas could lose around 150,000 customers on the first day of the second phase of the competition trials alone. If the same occurred when full competition is introduced by next year it would mean some 2 million homes rejecting British Gas.

So far 14 companies have been granted licences to sell gas in the second phase of the trials, involving 1.5 million households, which starts in Avon and Dorset from 10 February and in Kent and Sussex from 7 March. Ofgas, the industry watchdog, granted four new licences last week, of which three went to regional electricity companies.

The new trials are seen by industry experts as the real test of whether British Gas will lose a substantial chunk of its customer base, following well publicised complaints over service and billing problems.

Neil Lambert, joint general manager of Calortex, said: "We've found the switch rate is definitely much higher in the second phase than in the first phase. It could easily reach 10 per cent of customers in both sides of the market. Research we did in the South-west suggested people there were less likely to change supplier than in other parts of the country. In the South-east people are less conservative."

Almost 87,000 customers have so far moved from British Gas in the earlier trial, which involves 500,000 homes in Devon, Cornwall and Somerset. Calortex is thought to be the market leader in the South-west after British Gas.

Customers have been lured by discounts of up to 25 per cent from British Gas prices, with most offering to cut more than 15 per cent off gas bills. Rival companies can take advantage of last year's massive drop in the market price of gas, while British Gas is locked into buying gas at around 25 per cent above the "spot" price through its "take-or-pay" contracts.

A spokesman for British Gas Trading, the supply business, said it was too early to make accurate predictions about the second competition trials. "It's all just guesswork at the moment. We're obliged to lose market share anyway because we're the incumbent monopoly supplier at the moment. But the indicators were in the South-west that many more customers would switch than actually did in practice. The real test will be over a period of time and not at the beginning."

Rival suppliers are using a variety of advertising and some controversial doorstep selling techniques to persuade customers to switch from British Gas. Eastern Natural Gas, part of the regional electricity company owned by Hanson, has already been criticised by Ofgas for allegedly misleading customers.

Meanwhile, BP announced a $1bn deal to supply Ruhrgas of Germany with 15 billion cubic metres of gas over 15 years, from BP's North Sea fields.

This is BP's first sale of gas to continental Europe from the UK and the first time it has used the capacity it owns on the interconnector pipeline across the North Sea.

BP also said its share of the UK commercial and industrial gas market had more than doubled since August last year when it restructured its gas marketing activities. It is second to British Gas.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee