Pipeline deals may increase gas prices

GAS customers face higher prices under proposals to reorganise British Gas and sharply reduce its share of the industrial gas market, according to the Gas Consumers Council, writes Mary Fagan.

The council has called for an inquiry by the Monopolies and Mergers Commission to ensure that changes in the industry benefit domestic and business users.

British Gas has been told by the Office of Fair Trading to organise its pipeline and storage system as a separate business so that other suppliers can use it for the same price as British Gas's own trading arm. But British Gas is now demanding a high rate of return on the pipes business and is in dispute with Ofgas, the regulator, on what it can charge.

According to Ian Powe, the director of the Gas Consumers Council, the result is likely to be higher prices for customers. He also believes that too rapid an increase in competition will mean lower standards of service for consumers.

He said that the OFT's proposals go too far and too fast and that their ultimate effect is unknown. He also believes that government plans to reduce and possibly eliminate British Gas's monopoly over the service to domestic customers need more consideration.

He said: 'The Government is saying 'hooray, let's get rid of the monopoly.' But will anyone else offer the level of service that has been forced on British Gas by Ofgas? I doubt it.'