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.

Start your day with The Independent, sign up for daily news emails
Sport
Australia vs New Zealand live
cricket Follow over-by-over coverage as rivals New Zealand and Australia face off
News
Zayn has become the first member to leave One Direction. 'I have to do what feels right in my heart,' he said
peopleWe wince at anguish of fans, but his 1D departure shows the perils of fame in the social media age
Life and Style
Researchers found that just 10 one-minute swill-and-spit sessions are enough to soften tooth enamel and make teeth vulnerable to erosion
health
News
i100
Arts and Entertainment
The Regent Street Cinema’s projection room in the 1920s
film
News
Leah Devine is only the ninth female to have made the Young Magician of the Year final since the contest began more than 50 years
peopleMeet the 16-year-old who has set her heart on being the first female to win Young Magician of the Year
News
Jonathan Anderson was born in Northern Ireland but now based between London, where he presents a line named JW Anderson
peopleBritish designer Jonathan Anderson is putting his stamp on venerable house Loewe
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Taylor Swift is applying to trademark song lyrics from 1989
people
Voices
The popularity of TV shows such as The Liver Birds encouraged Liverpudlians to exaggerate their Scouse accent
voicesWe exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing