Gas users glow as shareholders swoon

Click to follow
Bad news for British Gas shareholders is good news for the consumer. The company's share price dived last week on the news of tighter regulation.

Its pipeline operation, TransCo, will have to cut its charges by between 20 and 28 per cent from next year. That should result in cuts in domestic British Gas bills of about pounds 30 a year, rising to pounds 50 within five years. By then, though, consumers, will be able to make even larger savings by switching suppliers.

Many of the world's largest gas, oil and electricity corporations are competing for a slice of British Gas's business. New suppliers include Calor Gas, operating in partnership with Texaco; a division of Total Oil; and gas supply companies established by the regional electricity companies Northern Electric, Sweb, Norweb and Southern Electric. Householders will be able to switch suppliers without changing their gas pipework.

Open gas competition will apply across Britain in 1998. But the South- east will have a free market in gas from next year. The South-west is already seeing the benefits in a trial scheme.

Consumers in Cornwall, Devon and Somerset can now cut pounds 80 off an average pounds 350 gas bill if they choose their new supplier with care. CalorTex is particularly competitive, with a low unit price of energy, and a cheap annual charge. Low users may find British Fuels or SwebGas even cheaper because they are not making an annual charge.

But competition brings problems, too. There have been many complaints about door-to-door pressure selling, particularly against SwebGas which has had to sack 10 sales staff. The Office of Fair Trading is being asked to provide a code of conduct for the utilities' salespeople.

Another problem is that TransCo intends to maintain its regional pricing structure. This would cut charges in London and the South-east, but raise them in more remote areas.