British Gas lobbies for penalty on late payers

BRITISH GAS wants to be allowed to impose penalty prices on late-paying customers.

The utility also wants the freedom to increase charges to consumers of small amounts of gas. It argues that it costs more to deliver fuel in small amounts and that the differential ought to be reflected in prices.

In addition, it wants to vary charges according to customer location. It says the fact that delivery costs increase with distance should also influence prices.

Users in the North-east and North-west, near offshore gasfields in the North Sea and in Morecambe Bay, may be able to buy the fuel more cheaply than users further away from the sources.

British Gas believes it may cost pounds 100m a year to fulfil its social obligations.

About 100,000 households have not paid a bill for more than a year, and nearly 1 million are in arrears of less than 12 months. But British Gas needs permission from its regulator, Ofgas, to change its charging structures.

Last week Cedric Brown, the utility's chairman, started lobbying Cabinet members and senior backbench MPs. In a letter to leading political figures, he wrote that customers should expect to pay the full cost of the resources they consumed.

He is concerned that rival gas suppliers, soon to be allowed to challenge British Gas's monopoly, may enjoy an unfair advantage and that new players will not have to operate under social obligations, such as maintaining a universal tariff.

Mr Brown wrote: 'We hope that legislation will be introduced in the autumn to enable fair and equal competition to the 18 million homes in the domestic market.

A spokesman confirmed yesterday that British Gas was reviewing its pricing strategy. But he stressed that the utility's commitment to helping elderly and disabled customers was unchanged.

He added that any price increases would still be within the current price formula of 4 percentage points less than inflation.