COMMENT : Gas dispute goes to the last resort

With much fanfare, British Gas yesterday launched its counter- attack against what it sees as draconian new price controls from the industry regulator, Ofgas. For us mortals, it is hard to know whom to believe, British Gas or Ofgas. The venom of British Gas's response would perhaps suggest that the regulator has indeed been too harsh. Certainly few would disagree with its comments on the arbitrary, personalised and unaccountable nature of regulatory decision-making. The system is a disgrace and the sooner it is reformed the better.

But equally, the cries of pain emanating from British Gas could be no more than bluster. It may well be that the regulator is getting the balance between customer and shareholder interest about right. With no sign of the gap between the two sides closing, the whole thing must inevitably end up before the Monopolies and Mergers Commission. The two sides are so far apart that they might as well be on different planets. On virtually every issue, from the size of the allowed depreciation charge through the supposed scope for effeciency gains, they are divided. Even on the matter of how British Gas has performed as an investment, which you would have thought a matter of record, they cannot agree. An MMC inquiry will absorb huge amounts of British Gas's time and energy, but none the less it seems the most appropriate way of resolving the row. Discredited though the MMC might be, it is the only court of last resort we have in these matters. Hopefully it will reach a conclusion we can all have confidence in.