British Gas puts off hike in charges for pipeline use

BRITISH GAS has backed down on controversial proposals to impose huge price increases for the use of its pipelines on other gas supply companies, including North Sea producers.

The company had said it would raise charges by up to 30 per cent, but Harry Moulson, who becomes managing director of British Gas National Transmission next week, said he was concerned about the way the increases had been calculated and whether they related properly to British Gas's costs. The climbdown was immediately welcomed by Ofgas, the industry regulator.

'I have raised questions as to whether costs have been adequately allocated between different parts of the business,' Mr Moulson said. 'It has not been done as professionally as I would like.'

No price increase would take effect before October next year. Mr Moulson would send proposals to rival suppliers to 'make their life better', including publication of how British Gas calculated the charges and consultation on how much they should rise.

British Gas had not talked enough to its pipeline customers, he said. Those customers also had to be confident that British Gas's own trading arm paid as much as they did for transporting gas. 'My job is to sell space in these pipelines. Whether it is British Gas or other suppliers, they are all customers and they all have to pay the rate.'

The about-turn came within weeks of the completion of a Monopolies and Mergers Commission investigation of the gas industry. The report is due to go to ministers by 31 July, but it is not yet clear when it will be published. Mr Moulson said his timetable to implement changes on transport arrangements was subject to the MMC report.