Gas competition to get go-ahead

The Government is expected to forge ahead with legislation for competition in the domestic gas market in 1996, and a decision could be made by the Cabinet today.

Tim Eggar, Minister for Industry and Energy, said that competition would first be introduced in April 1996 in an area the size of a large city or a county, serving about 500,000 gas customers. A year later it will be extended to cover two million customers in one or more areas, with full competition for 18 million households introduced by the end of 1998.

Speaking before the House of Commons Trade and Industry Select Committee, Mr Eggar refused to say whether the legislation would be introduced in the next session of Parliament. However, he said the Government believed that any delay in competition was undesirable. He said he intended to produce draft licences for new suppliers at the same time as a bill, 'assuming the right words are in the Queen's Speech'.

He said later that any delay would be due to lack of parliamentary time rather than opposition within government. There is speculation that if the Cabinet makes time for gas it will not go ahead with privatisation of the Post Office.

Mr Eggar said that the new gas supply licences would ensure that rivals, including North Sea producers and electricity firms, would bear the same social and universal service obligations as British Gas. It is likely that some sort of levy on all suppliers will be introduced to compensate any company left with a disproportionate share of less lucrative customers, including those with difficulty in paying bills.

Richard Giordano, British Gas chairman, earlier told the committee that the company plans to clamp down on almost six million customers who fail to pay their bills on time, through price increases at the end of this year.

Mr Giordano said the company would impose price increases for all domestic consumers, roughly in line with inflation but would also introduce discounts for those who pay by direct debit. He said there would be further price changes in 1995 to reflect the cost of transporting gas. The result would be regional variations in prices of plus or minus 2 per cent. Mr Giordano said it was impossible to say how many losers there would be.

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