Ofgas issues price warning to Transco

MARY FAGAN

Industrial Correspondent

Clare Spottiswoode, the gas industry watchdog, threw down the gauntlet to British Gas yesterday, warning of a clampdown on pricing of its core pipeline business, Transco. Ms Spottiswoode said she now expects the company to end up at the Monopolies and Mergers Commission over the new regime, which is due to be announced at the end of April.

Speaking at the launch of her annual report, the director general of Ofgas said she would be "very surprised if [the control] on Transco will not become tougher". Her comments sparked an angry response from the company, which plans to put its views to the regulator at the end of this week.

Philip Rogerson, executive director for Transco, said: ''If, as I believe, the director general has suggested that the new formula will be tougher than [at present] then I am extremely disappointed as the company has not yet put its case to Ofgas. To have formed that view seems very premature."

Ms Spottiswoode said that she must take into account issues such as the pounds 2.5bn which British Gas has already put aside for renewing pipes to the year 2000 and beyond and question how much the company needs to continue to raise at this stage.

The dispute over the pipelines erupted as Ofgas announced a 46 per cent increase to 3,389 in complaints and enquiries about British Gas in 1995. The bulk of the increase was people disputing their bills. Ms Spottiswoode said: ''British Gas has frankly got to improve its standards of service or the customer will go elsewhere." She said that 20 per cent of people in the South-west, where competition starts on 29 April, have said they will go to a new supplier. "Unless British Gas increase their levels of service they will lose people throughout the country," she added.

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