Watchdog investigates British Gas supply cuts

Ofgas, the gas industry watchdog, has launched an investigation into British Gas cuts in supply to power stations and other large users during the cold spell. The reductions in supplies to some power stations caused outrage and concern at the weekend, with the National Grid Company warning of potential power cuts.

At the same time the Electricity Association, the industry's trade body, is thought to have complained to the Grid for over-estimating the possibility of power cuts and causing unnecessary alarm. The Grid said last night that it "strenuously denies over-reaction", saying that it followed normal procedures in warning electricity firms that there could be problems ahead if the cold weather continued.

Ofgas has asked British Gas's pipeline arm, TransCo, if the breaks in supply to some customers were justified at a time when there is plenty of gas available in the marketplace. Many large users pay less for gas in return for agreeing to interruptions at times of very high demand but the watchdog is also demanding a full explanation of how the company decided who should be cut off and when, and how quickly the supply should be restored.

Ofgas is thought to have sent two separate requests for information to TransCo after the initial response failed to address its concerns. British Gas argues that large users on the special low cost deals were warned weeks ago that "interruptible contracts are just that".

The inquiry coincides with an investigation by Offer, the electricity regulator, over the power station supply problems. There is growing concern that, in the post-privatisation era, there is no one with the ultimate responsibility for keeping the lights burning. Offer has asked National Power, PowerGen and other generators to explain why they have fuel supply problems and whether they have backup if there is a problem with availability of gas.