Gas bills set for £14 cut

Many British Gas customers' bills will fall by around £14 next year thanks to a new price capping scheme, regulator Ofgem announced today.

Many British Gas customers' bills will fall by around £14 next year thanks to a new price capping scheme, regulator Ofgem announced today.

It said the enforced 5% reduction would probably last for just one year, on the assumption that competition in the domestic gas market would by then be sufficiently advanced to protect consumer interests on its own.

The price cuts should mean a reduction of £14 a year on typical bills for households using British Gas Trading's Standard and PrePayment schemes, and £12 a year for those on the PromptPay method, the regulator said.

It does not affect those who pay by direct debit, as competition for their custom is more developed.

Ofgem said it would take steps to increase competition for certain gas customers who are currently less well-served, and particularly wanted to stop gas firms objecting to customers in debt transferring suppliers.

The proposed new price controls affect customers across Great Britain who are currently connected to British Gas Trading's two brands - British Gas in England and Wales, and Scottish Gas in Scotland.

The caps are intended to come into operation from April 2000, and run for one year.

Under the system, British Gas - which has previously been able to pass the cost of gas it buys directly to consumers - will have its prices capped.

Ofgem, which also plans to promote competition within metering services, said it was "confident" the package of measures would develop competition sufficiently to allow all remaining price controls to be lifted in March 2001.

Ofgem director general Callum McCarthy noted that more than a quarter of gas customers had already switched from British Gas Trading, with an average of 32,000 households a month changing supplier.

"Because competition is more established in gas supply than in electricity, and customers have seen prices reduce as a result, we are proposing more limited price controls."

He said this meant that 5 million customers - those who paid by direct debit - could be removed from price cap schemes, with the remainder only covered for 12 months.

But Mr McCarthy stressed that fresh regulation could be imposed if required.

"We shall of course continue to be concerned about ensuring that competition is bringing benefits to customers, and if necessary, will use our powers under the Gas Act and the new Competition Act to ensure competition is effective," he said.