Pressure builds to open gas market

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The Independent Online
THE GOVERNMENT will come under renewed pressure this week to introduce competition in the domestic gas market.

Independent gas companies, which say they could cut gas bills by up to 10 per cent, will warn that failure to make time for legislation in the Queen's Speech could mean a delay of a year or more in bringing the benefits of competition to households.

Rivals to British Gas, which include electricity firms and North Sea producers, are due to give evidence on Wednesday to the Trade and Industry Select Committee inquiry into the domestic gas market. John Astrop, the commercial director of one of the largest independents, Kinetica, said there was a consensus that legislation was vital if competition was to be introduced in a way that ensured fair play and high standards for all consumers.

Roger Turner, commercial director of Utilicorp, said: 'If there is no legislation there will be no framework for a competitive market and the gas industry will become increasingly inefficient and out of touch with its market.'

Without legislation, there would be no way of ensuring that rival gas suppliers share the social and universal service costs of gas supply.

The Government has said it wants competition to begin in 1996 and to be fully phased in in 1998. However, plans for legislation to allow this to happen have been quietly dropped because ministers think the issue is too sensitive and because there is a desire to focus effort on privatising the Post Office.

Industry sources also believe that British Gas has muddied the waters by warning of steep price rises for some consumers as prices become related to cost in a competitive marketplace.

This has unnerved MPs in constituencies farthest from the coastal terminals, where British Gas believes some of the sharpest price rises could occur.

British Gas is also thought to have told the select committee that annual standing charges may rise to about pounds 42 from about pounds 37 at present before competition is introduced. This would hit hardest at the less well-off and those who use least gas because the charge forms a higher proportion of their bills.