Suppliers ask watchdog to block British Gas price cuts

Independent gas suppliers and gas consumers yesterday called on the industry regulator Ofgas to block new price cuts announced by British Gas, warning that they could destroy attempts to open up the market to full competition.

The calls followed confirmation that British Gas Home Energy is offering households in the South-west discounts of 12 per cent - equivalent to pounds 40 off the average annual bill of pounds 330 - in an effort to stem the loss of customers to rival suppliers.

The Gas Consumers' Council described the price reductions as "premature" while rival gas suppliers warned that if British Gas went unchecked it could wreck the Government's attempts to liberalise the domestic gas market.

Clare Spottiswoode, director general of Ofgas, immediately launched a four-week consultation exercise after which she will decide whether the price cuts should be allowed to stand. The new tariff applies only to customers paying by direct debit.

Since the South-west was opened up to full competition last April, British Gas has lost 19 per cent of the market. About 95,000 of the 500,000 households in Cornwall, Devon and Somerset have switched to rival suppliers, lured by discounts of up to 20 per cent on British Gas's standard tariff.

A second round of competition began among 600,000 households in Avon and Dorset last month and a third trial involving 900,000 customers in Sussex and Kent begins this Friday.

Peter Franklin, joint general manager of Calortex, one of the biggest independent suppliers in the South-west, with about 45,000 customers, said: "We are extremely concerned at this move, which poses a significant threat to the development of competition. British Gas is still nine times the size of the next biggest supplier and competition is still only in its infancy. This is abuse of a dominant position designed to frustrate the growth of competition and bring back what amounts to a private-sector monopoly."

He also pointed out that the South-west was the most expensive area of the country to supply, being furthest away from the east coast, where gas comes ashore. By cutting prices in the region and keeping them higher elsewhere, British Gas was using monopoly profits from areas of the country where it did not face competition to subsidise the South-west.

Alan Lias, managing director of Beacon Gas, which has signed up 40,000 customers for the trials in Sussex and Kent starting later this week, said: "We will be objecting very vigorously. British Gas should not be allowed to start competing on price until it has lost at least 50 per cent of its domestic market."

Sue Slipman, director of the GCC, said the British Gas move could widen the already large price differential between rich and poor customers and said it remained unconvinced that sufficient competition had built up.

Mike Alexander, managing director of British Gas Trading, defended the move, saying that one in four direct debit customers in the South-west had already switched to more competitive suppliers since last April, proving that competition was now fully established.

A special hotline opens today for customers to request application forms. Any customers who telephone asking to switch to the new tariff can give their meter reading and go on to the tariff immediately.

Rivals fear that if the price cuts are allowed to stand then British Gas will be able to repeat the tactics in other trial areas more quickly. According to industry estimates as many as 110,000 customers in Sussex and Kent - 12 per cent of the market - could switch suppliers on day one. In the South-west trial the comparative figure was 6.5 per cent.

Mr Lias of Beacon Gas, a joint venture between Amoco and the local electricity supplier Seeboard, said that if the regulator did not step in, British Gas could be competing on price and winning back customers within six months.

Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
A scene from the video shows students mock rioting
newsSchool leaver's YouTube video features staging of a playground gun massacre
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Morrissey pictured in 2013
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Robyn Lawley
ebookA unique anthology of reporting and analysis of a crucial period of history
i100  ... he was into holy war way before it was on trend
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain