More gas price cuts in pipeline

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The Independent Online
Independent gas suppliers are to step up their fight against controversial selective price cuts implemented by British Gas after an unexpectedly large number of households deserted the company in the latest trial of domestic competition in the South-east of England.

The furore began last month when British Gas announced it would cut bills for customers in the first competitive trial area, in Devon, Cornwall and Somerset, by between 6 and 12 per cent. It was the first time for decades that homes in one region have enjoyed bills lower than its national tariff from British Gas.

Centrica, the recently demerged British Gas supply business, which continues to use the familiar brand name, made the move in the South-west after losing a fifth of its customer base to rivals. Since the trial began last May more than 100,000 homes have switched supplier out of 500,000 taking part.

However, the latest internal industry figures make even more worrying reading for Centrica executives. They show customers have deserted British Gas far more swiftly in the most recent trial region involving just over 900,000 homes in Kent and Sussex. Since the trial began a month ago, 182,000 customers have either switched, or are thought to be in the process of switching, slashing British Gas's market share by 20 per cent. These statistics are well above figures released by Ofgas, the industry watchdog, which do not include homes which have signed contracts to move but have not yet done so.

Independent suppliers now believe British Gas is planning an early roll- out of its selective price reductions, known as "Value Plus", in Kent and Sussex if Ofgas approves the new tariff package on offer in the South- west. Ofgas is likely to decide whether to ban the price cuts within the next three weeks, after receiving strongly worded objections from independent gas companies. Most argue the reductions would crush competition before it gains a strong foothold.

Alan Lias, the managing director of Beacon Gas, argued that if British Gas was given the go-ahead, it should have to make customers sign a new contract. In the South-west consumers can move to the new tariff over the phone.

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