MMC report contained threat, says British Gas

The row between British Gas and the industry regulator, Clare Spottiswoode, continued yesterday after the company claimed the terms of her formal reference to Monopolies and Mergers Commission of its pipeline charges could be interpreted as a threat.

Ms Spottiswoode said the MMC's investigation would be confined solely to the prices charged by British Gas's pipeline and storage business, TransCo, after speculation that she was poised to ask for a much more wide-ranging probe into the company's structure.

However the Ofgas press statement raised the possibility that the MMC could widen its inquiry, which is expected to last six months, at a later date. Ofgas said it "does not ask the MMC to consider structural changes to British Gas at this time; however, it is possible for the director general [Ms Spottiswoode] to widen the terms of the MMC's investigation".

Philip Rogerson, British Gas's deputy chairman, said the company would have to prepare its evidence for the MMC panel on the basis that the investigation would eventually be expanded.

He said: "We are confused. First she says it's a narrow reference but then she says it might be widened. I don't know how to understand it ... this clearly could be interpreted as a threat."

The MMC referral followed automatically from the company's decision to reject the controversial five-year price regime, which would cut average gas bills to 19 million domestic customers by pounds 28 from next April. British Gas has savagely attacked the plans, which it claims would reduce TransCo's revenues by pounds 650m a year and lead to 10,000 job cuts, half TransCo's workforce, putting the pipeline system's safety at risk.

Ofgas told the MMC the current price formula enabled the company to charge unnecessarily high pipeline and storage prices compared with those needed to give shareholders a fair reward.

Earlier press reports had suggested Ofgas might want the MMC to consider whether the two businesses within TransCo International should be separated.

A wider MMC review into the structure of British Gas, which would have been the second in four years, could have threatened the company's plans to split itself in two. The demerger, due next spring, will hive off TransCo into a separate company which would include other activities such as offshore exploration and production.

Mr Rogerson said he assumed Ofgas would not seek to reopen the issue of the demerger, which was advocated by the MMC in 1993. But he said: "We have no alternative but to prepare for the possibility that the investigation might be widened. I'm struggling to know how to read this particular phrase in the press release."

A spokesman for Ofgas said the wording had been made for legal reasons and it was not the regulator's intention to widen the scope of the investigation.

"It's a technical thing that the lawyers asked us to put in. Technically Clare could extend the terms but it's highly unlikely that we'd bring in something new."

Shares in British Gas closed 4p lower at 184.5p following the statement from Ofgas.

Many analysts regard the shares as "dead money" for the foreseeable future until the row with the regulator is resolved.

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London