Call to hasten domestic gas shake-up: 'Swathes of MPs' to press ministers for action in next parliamentary session

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The Independent Online
THE GOVERNMENT is under heavy pressure to reinstate plans to legislate for competition in the domestic gas market in the next session of Parliament.

Over the past few days many Conservative MPs are thought to have joined independent gas suppliers in arguing that, without competition in domestic gas supply, bills in some regions will soar.

The regulator, Ofgas, is keen to press ahead with full competition and is thought to be optimistic now that ministers will make time for legislation despite earlier misgivings. It is not at the moment on the schedule but a spokesman for Ofgas said on Friday: 'We are working on the assumption that legislation will go through.'

Norman Ellis, chairman of Kinetica, one of the largest independent gas suppliers, said he wrote to 200 Conservative MPs last week on the need for competition.

'There are whole swathes of MPs now prepared to take it up with ministers,' he added.

Michael Heseltine, the President of the Board of Trade, has said that he wants to end the British Gas monopoly in domestic gas supply in 1996 with full competition phased in by April 1998.

But the Government is believed to have taken gas off its timetable because of the desire to privatise part of the Post Office. There are also fears that some consumers might be losers in a fully competitive market and that the issue could prove too sensitive in the present political climate.

British Gas' rivals, including electricity companies and North Sea producers, have taken 45 per cent of the industrial and commercial gas market which is already open to competition and are keen to break into the domestic sector.

The independents warn that without competition planned changes in the gas transport system will mean that people in areas furthest from coastal terminals will see prices increase by about 3 per cent, although some others will see prices fall.

They argue that with competition prices would drop by about 10 per cent, so all household bills would fall although some people might pay more than others.

Should the Government fail to find time for the legislative changes needed for competition in domestic gas supply Ofgas has alternative plans to open up the market, although these would also require ministerial approval.

The problem is that the alternative plan would leave British Gas with all the social obligations and as the only supplier with universal service obligations.

Unlike British Gas, rival suppliers would have no responsibility towards the old and the disabled. They would not have to supply less well-off customers who might not be cost-effective. Ofgas wants competition, but is determined to ensure fair play for British Gas.

A spokesman for British Gas said: 'Our position is that we want the Government to enact legislation and we want to see full competition in April 1998.'

At the same time, however, the company is lobbying for a delay of up to a year in the initial introduction of competition.