Domestic customers stay with British Gas

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The Independent Online
Government hopes for a spectacular start to competition in the domestic gas market are set to be dashed. Fewer than 30,000 customers plan to abandon British Gas in favour of other suppliers on the kick-off date of 29 April for the initial trial.

This will be a severe disappointment to the Government. Some industry sources had been predicting a switch of 60,000. Ofgas, the industry watchdog, had privately earmarked 50,000 - 10 per cent of customers in the South- west where the initial phase is to go ahead.

Most rival companies, which include electricity firms and North Sea producers, are unwilling to comment on the extent of their inroads into the market. South Western Electricity's gas division, one of the most aggressive of the newcomers, said: "We cannot give any numbers at the moment. It has a certain commercial sensitivity."

According to industry insiders, one large company is so dismayed by its lack of penetration that it is considering changing its name.

The final figures for those going over to new suppliers on 29 April have by now been given to British Gas' pipeline arm, Transco, in order to ensure a smooth transition. British Gas declined to comment on the figures but one company source said: "There have not been as many as expected. It does show that a lot of people want to stay with British Gas".

The sluggish take-off is, however, a double-edged sword for British Gas, which will face tough regulation until competition is established. The company feels it cannot drop prices in the South-west to match cuts of 15 per cent and more being offered by rivals, for fear of being seen to act anti-competitively.

A company spokesman said: "We cannot go out and compete on a level playing field until market share has gone. That is what the whole process is all about.

"It is important to remember that these are the first tiny steps in an evolution that will take place over two years as competition spreads throughout the UK."

Many in the industry will blame the initial disappointment on aggressive or misleading doorstep selling techniques by some firms. Sweb and CalorTex have been criticised by the Gas Consumers Council, which was outraged by complaints from customers in the area. Sweb was also severely rebuked by local trading standards officers.

Sweb's gas arm had 41,000 potential customers but many of those are thought to have later retracted. A company source admitted to a "large number" of subsequent rejections.

Ofgas is now launching a campaign to inform customers that they have seven says to change their mind after signing up to a supplier as the result of an unsolicited visit.

The GCC has also issued warnings. Ian Powe, its director, said: "Our advice is to sign nothing until people know what British Gas intends to offer customers ."