MMC calls in watchdog over investigation into British Gas

The gas watchdog, Ofgas, has been called back for a last-minute hearing before the Monopolies and Mergers Commission as part of its investigation into British Gas's pipeline charges, making it almost certain that the MMC's conclusions will not be made public until after the election.

The news is likely to fuel already intense speculation in the industry that Clare Spottiswoode, the industry regulator, has failed to win MMC support for her controversial plans to slash BG's pipeline charges, cutting pounds 30 off average annual gas bills for domestic customers.

BG, which mounted an unprecedented public campaign against the proposals, has claimed it will reduce its revenues by more than pounds 400m a year, making it almost impossible for the company to pay dividends to shareholders.

The speculation boosted BG's share price yesterday, which gained 3p to close at 164.5p in heavy trading.

Ofgas yesterday confirmed that officials, likely to include Ms Spottiswoode and her chief economist, Eileen Marshall, have been asked to return to the MMC to give further evidence on Tuesday. The move suggests the final report, which will run into hundreds of pages, will be delayed although the MMC was not available for comment. The hearings, on-going since before Christmas, were thought to have finished.

An Ofgas spokesman said: "The MMC have requested another meeting with us. We're obviously more than willing to oblige." He denied that the move suggested the MMC was unhappy with Ofgas's case. "This is a two-way process. We are just doing our best and helping the MMC when they ask us for further information."

The completed MMC report was due to be handed over to the regulator on Monday 14 April. Both Ofgas and BG have privately admitted that even if the document was handed over within this deadline, it would not be made public until after the general election.

The head of one independent gas supply company, who did not want to be named, said the additional hearing suggested BG was likely to come out of the MMC process, which the group instigated, in better shape than Ms Spottiswoode. "If BG get the cuts in charges reduced by more than half the Ofgas figure then they will claim it as a major victory."

Another industry source who attended one of the MMC hearings said: "The panel consistently referred to BG shareholders as 'Sids'. If the MMC's task is to decide what is in the public interest, then talking about Sids suggests they interpret that phrase in terms of shareholders as well as consumers, which of course is good news for BG."

A BG spokeswoman declined to comment. "This is a matter for the MMC and we never discuss speculation."

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