Crunch day as Eggar steps into gas row

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The Independent Online
The Government will today step into the row between British Gas and its potential rivals . It has summoned British Gas to a crunch meeting that will include the industry watchdog, Clare Spottiswoode, following allegations in the industry that the company is dragging its heels over the introduction of domestic competition in April next year. Cedric Brown, chief executive of British Gas, may also attend in an attempt to resolve the issue.

Competitors to British Gas, including North Sea producers and electricity companies, believe that British Gas is deliberately trying to delay competition on the grounds that the arrangements needed to cope with multiple suppliers will not be in place.

The meeting has been called by Tim Eggar, the minister for energy and industry, who is determined that competition for up to 500,000 households in the South-west of England will be available from 1 April. It will then be extended to two million homes in 1997, with the market open nationally in1998.

Ms Spottiswoode, who is believed to be increasingly angered by British Gas's attitude, is also likely to oppose vociferously any slippage in the timetable. According to one industry source: ''When politics and companies get mixed, who knows what the outcome will be. This is likely to be a very important meeting."

The row primarily involves the British Gas pipeline subsidiary, Transco, whose relationship with the regulator has become strained in recent months. But Richard Giordano, British Gas chairman, has also warned that the Government's schedule for the introduction in April of competition in the domestic gas market leaves little time for a proper testing period and could "create significant risks".

British Gas blames any reticence on government delays with the legislation allowing for competition and the establishment of a network code which embodies the rules and regulations of the competitive market. A spokesman for Transco said: ''We are being pragmatic. We want more time to sort out any potential problems." Rivals say British Gas will do anything it can to keep them out of the market place.

The latest debacle coincides with the announcement yesterday by Total Gas Marketing that it will enter the domestic market next year, undercutting British Gas by an average of up to 16 per cent. Recently Amerada Hess said it would offer savings over British Gas of about 15 per cent.

Total said people paying promptly and by direct debit would see additional savings and that, overall, the minimum saving for households will be 10 per cent. The company is wooing potential customers with an initial pounds 10 payment in the form of a Marks & Spencer voucher.

There are fears in British Gas that many companies will pour into the domestic market, creaming off the most lucrative customers. British Gas's share of the industrial and commercial market - where competition is already allowed - has plummeted to about 35 per cent.

The spectre of domestic competition is just one of the problems that have plunged British Gas into turmoil over the last year. The company is struggling to recover from a series of public relations fiascos and boardroom upheavals. It also faces severe difficulties over costly long- term "take or pay" contracts with North Sea producers, which force the company to buy more gas than it can sell. The availability of cheap spot market gas allows rivals to undercut the company and there have been warnings that domestic competition will make the situation worse.