British Gas to freeze charges

BRITISH GAS is to freeze prices for domestic customers in October because of uncertainty over the current Monopolies and Mergers Commission review of the industry, writes Mary Fagan.

Under its price control formula the company could have increased charges by 1 per cent, but it is now unlikely to make any change before the end of this year.

The decision to maintain prices failed to impress the Gas Consumers Council, while Ofgas, the industry watchdog, said the 1 per cent increase would in any case probably have been swallowed up by the administrative costs to British Gas of making the change.

Ofgas also attacked as unnecessary a Mori survey on customer satisfaction, commissioned by British Gas and published yesterday, which showed that consumers would rather have high standards of service than cuts in their bills. 'Value for money is a combination of price and standards of service: British Gas cannot now trade service standards at the expense of price,' said Sir James McKinnon, Ofgas's director general.

In its submission to the MMC, Ofgas suggested that British Gas should be broken up into more than a dozen companies to promote further competition in the gas supply industry.

The review was due to be published by the end of this month but it has already slipped by months and some industry sources now believe that it may not be released to the public until the autumn, when Sir James is expected to retire.