British Gas in new price row

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The Independent Online
British Gas is facing another wave of criticism from rival suppliers over allegations that the company is manipulating the gas market to alleviate its potentially huge losses from its so-called take-or-pay contracts.

Several rival firms are preparing submissions for the industry watchdog, Ofgas, which are likely to claim that the recent increase in gas prices has beenpartly caused by British Gas's activities in the fuel market.

Ofgas is investigating the claims and has asked industry members for their comments. The head of one gas supply firm said yesterday that his submission would insist that the rise in prices went far beyond any normal operation of the market.

"It wasn't just the fact that prices went up - it was the unprecedented severity of the increase," he said. "People are bemused because the fundamentals haven't changed. In theory there should still be a big oversupply of gas."

Gas prices have risen by some 60 per cent since earlier this year. Despite a brief pause over the past few weeks, the latest spot price data suggests they are climbing again.

The price for December delivery is 15.5p a therm, compared with prices of as low as 9p earlier this year. For delivery in the new year the price has shot up to more than 18p a therm.

At least one independent supplier has had to raise the prices it charges to consumers in the trials of domestic competition under way in the South- west. It has emerged that Calortex, the joint venture between Calor and Texaco, put its prices up from the beginning of the month.

The increase in spot prices is benefiting British Gas, which is burdened by its pounds 40bn worth of take-or-pay contracts, priced at around 20p a therm.

One allegation by the independents has been that British Gas has used its huge buying power to keep the spot price of gas artificially high. A British Gas spokesman denied the allegations.