Commentary: More trouble in the pipeline

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The Independent Online
Lord Walker, when Secretary of State for Energy, is said to have asked Sir James McKinnon if he was the type to go around causing trouble. That was in 1986, before he appointed Sir James as director-general of the gas watchdog, Ofgas.

In the intervening years, Sir James has proved, if not troublesome, a tough and pro-active regulator, causing much anguish at British Gas. Lord Walker, now an influential non-executive director of the company, reportedly feels that appointing Sir James was a mistake.

The most recent clash was over the use by third parties of the pipeline system. Relations between the two appeared to have reached an all-time low, with British Gas complaining about arbitrary decisions not backed up by reasoned argument. At the company's own request, the Government referred British Gas to the Monopolies and Mergers Commission. The move gave the impression that Ofgas had been sidelined.

But Sir James and Ofgas are not about to go away for the year the MMC will take to ruminate. The industry will not stand still and competitors, in the form of independent gas suppliers, are raring to go. Ofgas will intervene where necessary on a case-by-case basis to help other gas suppliers that want to use the British Gas pipes.

There is also, of course, the question of domestic gas prices, and ensuring that British Gas is sticking within Ofgas's price control formula.

When Sir James returns from holiday in the south of Italy, normal warfare may well resume for regulator and regulated alike.