Spottiswoode signals her intention to step down

Clare Spottiswoode, the gas industry regulator, is unlikely to stay on in the post when her contract expires next year, unless the Government moves swiftly to merge the electricity and gas watchdogs. Chris Godsmark, Business Correspondent, reports on the growing dilemma for Labour as ministers review the shape of utility regulation.

Ms Spottiswoode, who is paid a salary of pounds 90,000, is understood to be reluctant to continue as gas regulator when her five-year contract at Ofgas, the industry watchdog, comes up for renewal on 31 October 1998. In most previous cases regulators have been asked to stay at the helm for a second term. However, Ms Spottiswoode has warned she is unlikely to commit herself for another five years, though she has not made a final decision.

She would be the second utility regulator to leave the job since Labour came to power. Last month Don Cruickshank, the telephones regulator, said he had decided not to ask for another five-year term at the helm of Oftel, insisting he was looking for new challenges.

It is understood Ms Spottiswoode shares the same worries about her position at Ofgas, after full domestic gas competition is introduced across the UK next summer. She believes most of the big challenges involved in reforming the gas market would have been addressed, leaving her a reduced role in the future.

The much touted merger of Ofgas and Offer, the electricity watchdog, would have encouraged Ms Spottiswoode to seek another term. But she has apparently received no steer from the Department of Trade on when the rationalisation would take place, if at all.

John Battle, industry minister, has previously indicated he would favour a merger on the grounds that many companies, such as British Gas, are to sell both gas and power. However, Mr Battle has suggested it would be better to wait until the domestic electricity market has opened up, a process which is due to take place next year but is widely expected to be delayed.

It was unclear yesterday whether Ms Spottiswoode had told the Government of her likely decision, though ministers are aware of her keenness to merge Offer and Ofgas. The DTI is reviewing utility regulation and is due to publish a Green Paper on the whole system in December.

Ms Spottiswoode's reign at Ofgas has been controversial. She persuaded the Conservative government to push new gas legislation through parliament as the precursor to domestic competition. Trials of residential competition have been a success, despite concerns about billing difficulties and doorstep selling tactics.

Another success was the victory over price controls for the former British Gas's pipeline business, Transco. But in recent months she has been under pressure, with fears that low-income customers were getting little benefit from competition, and concerns about selective price cuts introduced by British Gas.