Gas plan poses 'no risk to safety'

The Gas Consumers Council has dropped its long-standing concern that customer safety could be compromised by the controversial price controls proposed for the British Gas pipeline business, TransCo, by the industry watchdog, Ofgas.

With just a day to go before publication of the final version of the price formula, the chairman of the Council, Ian Powe, said he had been satisfied by the Health and Safety Executive that the measures did not represent a safety threat.

The news is a boost for the regulator, Clare Spottiswoode, who is at the centre of one of the most bitterly fought battles witnessed between a regulator and a privatised utility.

Ofgas has proposed cutting TransCo's revenues by between 20 per cent and 28 per cent from next April.

British Gas has claimed this represents a cut of pounds 650m to pounds 850m in the first year of the price formula, which would wipe up to pounds 595m off its profits. It has warned that the only way it could make such savings would be to cut 10,000 jobs at TransCo, which runs the emergency service for gas leaks - putting safety at risk.

But in a briefing document sent to its regional staff, the Gas Consumers Council (GCC) said the Health and Safety Executive had allayed its fears. The document said: "Our one reservation about all this has been whether or not the cuts Ofgas proposes will dangerously hinder British Gas's expenditure on safety related projects."

It continued: "HSE is satisfied that TransCo will be allowed all the capital expenditure it has forecast for mains replacement. HSE has (so far) raised no objection to the cuts Ofgas proposes on operational expenditure where BG claims (and Ofgas questions) it is justified on safety grounds.

It concluded: "We are confident that HSE will not approve TransCo's safety case (which it must submit later this year) if it implies risks to safety arising from cutbacks in expenditure."

The GCC has consistently backed Ofgas's price proposals, which would reduce the average domestic bill by around pounds 30, but has voiced concerns about the safety implications.

Mr Powe had asked the HSE to examine safety before the final price formula was published. Particular concerns raised by the GCC were that pipelines would not be replaced quickly enough, and that the emergency service's response to calls would slow down.

Last night Mr Powe said he had received a reply from the head of the HSE, and said: "There's nothing in what the HSE has told us which leads us in any way to question whether there is still a safety threat."