Launching proposals for a root-and-branch reform of the regulatory system, Richard Giordano, chairman of British Gas, told the Commons Trade and Industry Select Committee that erratic decision-making by the watchdog, Ofgas, had been responsible for the company's disastrous share price performance. He said this had been about as popular with small investors as the "bubonic plague".
He said: "The British Gas shareholder has done terribly. If you look at the index of other companies this has to be a pretty dismal performance."
The company is facing a lengthy investigation by the Monopolies and Mergers Commission after it rejected plans by Clare Spottiswoode, the regulator, to slash charges in its monopoly pipeline division, TransCo. The cuts would knock around pounds 30 off average gas bills next year, but British Gas claims they would reduce TransCo's annual income by pounds 650m.
When the proposals were first tabled in May the group's share price fell by a third and has been mostly flat ever since. However, consumers have fared much better with bills falling by 25 per cent in real terms since privatisation 10 years ago.
Mr Giordano argued that gas regulation had become bogged down by personalities and proposed replacing a single individual in the role with a board led by a chief executive. The CBI suggested a similar reform last week, though Labour's current thinking is for a board of individuals with equal seniority.
"I don't know of any other system which has a regulator with this much discretion, not subject to checks and balances, not subject to appeal," Mr Giordano said.
However, he insisted he did not blame Ms Spottiswoode personally. "I've often thought, if I was the regulator I'd behave in the same way," he said.Reuse content