Competitors protest at delay in gas legislation

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The Independent Online
INDEPENDENT gas suppliers and the Labour Party have attacked government moves to shelve legislation opening the market for domestic gas supply.

The suppliers, which include electricity firms and offshore producers, have written to Michael Heseltine, the President of the Board of Trade, calling for legislation to be introduced in the next session of Parliament and warning that Britain will suffer if it is delayed.

The Government had planned to open the domestic gas market to competition in 1996, with full liberalistion phased in by 1998. But ministers are keener to use the parliamentary time to begin privatisation of the Post Office.

Independent gas companies believe they can undercut British Gas by 10 per cent on household gas bills. They warn that, without competition, prices for many consumers will rise. That is because British Gas is pressing ahead with a new pricing regime for the use of the pipes, which will result a variation in prices across the country, with those farthest from the coastal gas terminals paying more.

Norman Ellis, chief executive of Kinetica, one of the largest independent suppliers, said: 'Only competition can ensure that everyone sees lower prices.'

Ofgas, the industry watchdog, could enable competition by lowering the threshold of annual gas consumption above which British Gas rivals can supply customers. At present this is 2,500 therms a year compared with about 300 for the average household.

Some companies say that lowering the threshold is not a long-term solution. Meanwhile, Labour is incensed that such a route could be used, allowing no debate over liberalisation in Parliament. Martin O'Neill, Labour energy spokesman, said: 'Political decisions on the provision of fuel should be made by elected politicians rather than by unaccountable regulators.'