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British Gas outgrows its pounds 150m computer system

British Gas's troubled new pounds 150m customer billing system, thought to be Europe's largest and most ambitious computer project, could soon be out of date and and will not be able to cope with the company's planned expansion into the domestic electricity market, senior industry sources warn.

The company now faces the embarrassing task of developing another computer system to handle its drive to sell electricity when the power market opens up to competition in 1998. Centrica, the gas supply company which will be formally demerged from British Gas next month, has already made clear that its long-term future lies as a multi-utility, offering electricity supplies to its 19 million gas customers.

The latest computer problems come just months after British Gas was forced to spend a further pounds 80m on top of the original investment to sort out serious glitches in the system, known as Tariff Gas Billing (TGB), which led to a huge increase in customer complaints.

The Gas Consumers Council was inundated last year with complaints from people who were unable to get through to the company's customer service representatives..

Earlier this week Mike Alexander, managing director of British Gas Trading (BGT), the supply division, told a Commons select committee that the billing problems had mostly been ironed out. "I hope 1997 will not see a repeat of 1996," he told MPs.

However figures released yesterday from the Gas Consumers Council showed that complaints against BGT received in December, at 1,963, were still 101 per cent above 1995. Total complaints against BGT last year also surged by 103 per cent to 34,211.

The new shortcomings in the billing system stem from the need to accelerate the timetable of the project after the Government decided to bring forward the introduction of domestic gas competition from 2000-2002 to 1996-1998. This involved replacing 12 regional computer databases, which used more than 60 separate networks of differing ages and specifications, with a single national system that could track British Gas's residential customers as they switched to rival suppliers.

Instead of developing an entirely new system, British Gas was forced to base the TGB project on an expanded version of its existing regional database in the West Midlands. ICL was given the contract to replace hardware in 1994, while the software systems were developed by British Gas's in- house information technology team with the target of going live across the UK in just two years.

"The fact that we managed to build it at all in that time is an incredible achievement," said one person involved in the project. A similar-sized system constructed by British Telecom from the late 1980s took at least twice as long to develop.

Though the TGB system is currently being developed to allow gas bills and boiler service contracts to be merged on to one customer statement, the move to joint billing for electricity contracts is thought to be much more difficult. A spokesman for British Gas Trading said yesterday: "The decision about specifically how we are going to bill electricity customers has not been taken yet."

Once source close to the project suggested the most likely solution was a separate computer system which would "talk" to the existing system. However this would not only involve heavy additional investment but also expensive modifications to the TGB system on top of the pounds 150m so far invested.

British Gas is far from the first large company to experience serious setbacks to computer projects. Last November Hyder, the multi-utility that owns Swalec and Welsh Water, scrapped a pounds 35m computer investment which was also intended to spearhead a drive into the competitive electricity market in 1998.