Spottiswoode faces call to help `poor' gas users

Clare Spottiswoode, the gas industry regulator, came under intense pressure last night to block selective price cuts planned by British Gas which would see 3 million of the company's poorest customers largely excluded from a 9 per cent reduction in bills.

Sue Slipman, director of the Gas Consumers Council, wrote to Ms Spottiswoode yesterday evening, disputing the legality of the cuts and urging the regulator to intervene. The letter argued that Centrica, the demerged British Gas supply business, had a statutory duty in its operating license to spread the reductions across all of its 19 million domestic customers.

It emerged that Ms Spottiswoode was told about the selective price cut plans several weeks ago and had apparently offered no opposition. They would knock pounds 28 off an average pounds 340 gas bill from January, but only customers who pay bills by direct debit or who settle their accounts within 10 days would get the full benefit.

One million homes which use pre-payment meters would see no reduction, while a further 2 million low income households would mostly see their bills drop by less than 1 per cent. The cuts are the result of a fall in pipeline charges levied by Transco, the pipeline division of the former British Gas, along with the abolition of the gas levy, a tax on North Sea contracts, in the Budget.

Ms Slipman said: "The regulator has to explain why British Gas hasn't been asked to pass these savings on to everyone. They're discriminating against one class of customer." John Battle, industry minister, is understood to be unhappy with the plans.

The row was widened by independent gas companies competing in domestic competition trials, which claimed the cuts were designed to help British Gas fend off its rivals when the residential market opens up fully next year.

Energis, part of United Utilities, said it was "very concerned" that Ms Spottiswoode had not intervened. "Our major concern is over the timing of the announcement, which may well serve to discourage new players into the market," said a spokesman.

British Gas insisted it had not broken any rules. "We think the GCC is wrong on that," a spokeswoman said. The company said pre-payment meter tariffs had been frozen pending the outcome of a Government review into the workings of the system in the competitive market.

It also emerged yesterday that Ofgas had formally objected to proposals to subsidise pre-payment meter customers in a paper submitted last week to the Government by one of the two official working parties investigating the issue.

The panel, led by the GCC and including most leading gas suppliers, said action was urgently needed to ensure low income customers were not penalised by competition.