British Gas to hold back on domestic price cuts
Monday 12 February 1996
The company is to wait until "competition is established" before cutting charges, rather than risk the wrath of the Government or the regulator, Ofgas.
Rivals to British Gas, including North Sea producers and electricity firms, are promising to undercut British Gas existing by up to 20 per cent and more.
About 60,000 households in the South-west - the first area earmarked for competition - have already said they are interested in abandoning British Gas in favour of new suppliers.
The beleaguered company, which last week announced its intention to split in two, was widely expected to follow suit. But a spokesman said:"The licence says we cannot do anything anti-competitive or predatory. There will be no immediate price cuts in the South-west. We must not upset the applecart. Prices will come down but not until an open market is established and no one knows at what stage the Government and the regulator will consider that to be."
It is thought that, if competition begins on schedule in April, British Gas may not cut prices until late summer or autumn, by which time it could have seen a sharp reduction in market share.
Its reticence about responding aggressively comes in spite of Ofgas' view that it should be allowed to match others' prices, while not leading them down.
British Gas is likely to base its campaign on quality and reliability. The spokesman said: "Others have been very reticent to say what they will deliver in terms of service."
Competition issues aside, there could be a public and political outcry if consumers in other parts of the UK see the South-west paying less for gas while their bills remain unchanged until the market is fully opened in 1998.
With an election in the offing, the Government is likely to be keen that competition in domestic supply does not turn into a banana skin.
British Gas may also be seeking to avoid any more bad publicity after more than a year of fiascos in its relationship with the public, culminating in the announcement last week that its chief executive, Cedric Brown, will retire early in the spring.
In the eyes of the nation,Mr Brown became a symbol of "boardroom greed" at the end of 1994 after his pay was increased by 71 per cent to pounds 475,000.
Richard Giordano, chairman, fiercely defended the changes at the time but now says that he would not have introduced the changes in pay structure which enabled the increase if he had foreseen the "fat cat" row that ensued.
It has also emerged that British Gas wants the Government to eliminate its golden share in the company completely after the planned split into two in 1997. Under the existing proposals, the Government would not have a golden share in British Gas Energy, the company with responsibility for supply. But it would retain a share in Transco, which will own the pipelines and the international exploration and production business. Without the golden share, Transco would be subject to the same threat of takeover as any other company.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 War is war: Why I stand with Israel
- 5 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber reach almost £154,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: The terrible price children are paying for Israel’s war with Hamas
Online trolls target alleged rape victim Jada, by copying how she appeared in video of attack
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
War is war: Why I stand with Israel
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...
£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...
Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...