Spottiswoode forced to investigate price cuts

Clare Spottiswoode, the gas industry regulator, is being forced to investigate and then report back publicly on complaints that British Gas's latest round of price cuts discriminate unfairly against 3 million low-income households.

The Gas Consumers' Council yesterday submitted a formal "referral" to Ofgas under the Gas Act, arguing that Ms Spottiswoode had broken her own rules in allowing British Gas to discriminate in this way.

The price cuts, due to be introduced in January next year, will be worth pounds 28 a year to the average consumer or 9 per cent off the standard domestic bill. However, they will only be available to 16 million customers who either pay by direct debit or settle their bills within 10 days. Customers on pre-payment meters or budget plans have been excluded on the grounds that they are more expensive to service and unprofitable for British Gas.

In its submission, Sue Slipman, director of the GCC, says these customers are being treated unfairly because the price cuts stem from reductions in the charges that can be levied by Transco, the transportation arm of BG.The GCC says that Ofgas ruled in 1995 that Transco's charges were "joint costs" shared by all classes of consumer and therefore the reductions in the charges should be applied across the board.

John Battle, the industry minister, has also made known his unhappiness at the way price cuts are being introduced and is meeting Roy Gardner, chief executive of Centrica, the trading arm of British Gas, next Wednesday to discuss the matter.

Ofgas had said it had no intention of investigating the issue further. But the GCC's intervention will force it to conduct an examination. The investigation is likely to take at least three months which may mean that price cuts have been introduced before Ofgas has published its findings.