Domestic competition put back for British Gas
Wednesday 28 February 1996
British Gas has won a month's reprieve on the introduction of competition in the domestic marketplace, originally due to start on 1 April in the South-west. The delay, which defers potential price cuts for thousands of consumers, was agreed by the Government after months of lobbying by the company, and has disappointed rival firms who fear British Gas will seek to push the date further back.
Competitors to British Gas, including Amerada Hess, Total Gas and electricity firms, say they are ready to run. One senior executive said: "The reason is purely British Gas. They have done a lot of work scaring politicians and the regulator about what may happen if things go wrong but now we must make sure that the 29th sticks."
Another added:"As always British Gas is last to the gate. Is that sloth, planning or a slip-up?"
British Gas had argued that the computers and other systems needed to cope with multiple suppliers need more time for testing and that there could chaos if competition begins too soon. The company hoped for a postponement at least until June but the regulator, Ofgas, said yesterday that 29 April is "a real date".
Tim Eggar, minister for energy and industry, said: ''It is well known that we had hoped to achieve the formal opening on 1 April. However I am sure the director general [of Ofgas] and her review group, which included leading independent consultants, were right to recommend a four-week deferral in the interests of customers." He said that the delay would allow for the "thorough" processing of licence applications and ensure the required systems are in place." An Order giving effect to the 29 April start will be laid before Parliament shortly.
The Gas Consumers Council said that the deferral "strikes the right balance between risk and reward for consumers".
Ian Powe, director of the GCC, said: "People using an average amount of gas can save no more than a fiver in four weeks by changing supplier; that is a cheap price to pay for reducing the risk of disorder on day one of this exciting adventure."
Competition will cover an area including 500,000 homes, extending to two million in 1997. There had been suggestions that a daily maximum quota of those defecting from British Gas should be established but this has been rejected by Ofgas.
The agreement on a date coincides with the launch of the latest competitor, British Fuels, which is offering savings of about 20 per cent on British Gas standard tariffs. The company, one of the UK's largest fuel distributors, was bought out from British Coal at the end of last year. British Fuels is also offering pounds 150 off the price of a family holiday for those who sign up within four weeks.
In addition to those firms who have declared their interest, several electricity firms are expected to enter the market. The names most talked about include Eastern Electricity, now owned by Hanson, and Norweb.
Reductions on British Gas standard tariffs
At least 15 per cent savings for everyone. Reductions cover both standing charges and units of gas.
Savings of between 16 per cent and 19 per cent for the average customer. Both standing charge and unit costs cut. Exact benefit depends on method of payment.
Savings of about 20 per cent. No standing charge.
Savings of 17.2 - 21.2 per cent. Added benefits for direct debit.
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