British Gas to hold back on domestic price cuts

British Gas has decided against slashing prices to maintain market share when competition is introduced in the spring, giving rivals an unexpectedly clear run at the domestic market.

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.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Guru Careers: Research Associate / Asset Management Research Analyst

£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash