British Gas wants pounds 42 standing charge for 'competition costs'

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STANDING charges for gas customers should increase by more than pounds 5 to pounds 42 if they are to properly reflect costs in preparation for competition in the domestic gas market, according to British Gas evidence to the Trade and Industry Select Committee.

The Gas Consumers Council said that the result would be an increase of almost 7 per cent in gas bills for smaller customers and of 2 per cent on the average household bill.

The GCC said that the evidence, which it has seen, suggests that the standing charges could be higher than pounds 42 for some customers who would be offered a rebate if they agreed to pay by direct debit.

Ian Powe, director of the GCC, said that the increase would hit the less well-off hardest as the standing charge is a higher proportion of their gas bill. He also warned that introducing discounts for payment methods such as direct debit would penalise those without bank accounts, which again suggests that the less well-off would suffer most.

The Select Committee is trying to analyse the effect of the Government's plans to introduce competition in the domestic gas market in 1996, with the market opening fully in 1998. It is not clear whether the Government will make time for legislation enabling the orderly introduction of competition from companies including electricity firms and North Sea producers.

British Gas, which is due to appear before the committee next week, would neither confirm nor deny the standing charge figures. A spokesman for the company said: 'No decisions on prices have been made. It would be quite wrong to comment on our evidence before the Select Committee has considered it.'

In the light of the new figures, Mr Powe also called upon British Gas to retract earlier predictions that gas prices might rise by up to 94 per cent for about 12 million customers. The projected increase, given during a Monopolies and Mergers Commission inquiry in 1992, has caused many MPs and others to doubt whether they should give their support to the introduction of competition in domestic gas supply.

Speaking before the Select Committee, Mr Powe said: 'Failure to withdraw that statement and replace it with another is conduct unbecoming to British Gas.'

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