There is concern that gas prices could rise for millions of consumers in a competitive market, in which bills would reflect the cost of supply. British Gas says many customers, particularly those who use least gas, are unprofitable and must be cross-subsidised by larger customers. Prices for those living farthest from the coastal gas terminals are expected to rise most.
Ian Powe, director of the Gas Consumers Council, said: 'An inquiry will judge the validity of British Gas threats of higher gas bills for millions of people and of the Department of Trade and Industry's placid acceptance that price increases are unavoidable while the market is fattened for competition.'
In the run-up to competition, British Gas is considering discounts for larger domestic customers at the expense of others. The company is concerned that new suppliers, including electricity companies and North Sea producers, will try to skim off the most lucrative domestic consumers.
The issue has been complicated by uncertainty over whether the Government will find time for legislation to enable competition in domestic gas supply in the next session of Parliament.