Call for review of Britsh Gas price formula

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The Independent Online
The Gas Consumers Council has called for a review of the British Gas price control formula in the light of falling standards of service provided by the company. The GCC believes that a key element in setting the price cap is the level of service t o customers and that if those services suffer then prices for domestic customers should fall.

The Council will write next week to Clare Spottiswoode, the director-general of gas supply, asking her to confirm whether 14 standards used in setting the formula have fallen substantially. These cover areas including customer contact, obtaining and continuity of gas supply, emergency services, appointments, accounts and debt and disconnection.

According to the GCC, complaints to the council involving regulatory standards rose from 131 in 1993 to 508 last year. Ian Powe, director of the GCC, said: "The real issue for consumers, especially domestic consumers, is about value for money. Regulator s can adjust the price cap formula so that the supplier cannot recover more than the costs of a service that consumers actually receive."

Currently, British Gas must limit annual price changes for domestic customers to inflation minus 4 percentage points. Mr Powe, who has been increasingly worried about standards of service, will ask Ms Spottiswoode to examine whether that might not be tightened. The GCC has also asked the Government to consider whether British Gas's Charter Mark is still justified.

In 1994, overall complaints about British Gas to the Gas Consumers Council rose by 11 per cent to 18,043, having fallen in 1993 and 1992.

The GCC said that the "tide of customer dissatisfaction" had already begun before the recent furore over high executive salaries at British Gas.

British Gas has been at the centre of controversy since it emerged at the end of last year that it had decided to increase the pay of Cedric Brown, chief executive, by 75 per cent.

Mr Powe said the recent reorganisation within British Gas had made consumers even more concerned. Service would suffer further this year as changes in the company took effect.

Earlier this week British Gas acknowledged that things were less than perfect. Norman Blacker, executive director, said: "We are going through a massive reorganisation; inevitably that is putting strains on some services. These are temporary difficulties."

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