Gas split sought by watchdog

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THE STRAINED relationship between British Gas and the industry watchdog boiled over again yesterday after calls by the regulator, Sir James McKinnon, to break up British Gas.

Robert Evans, its chairman, attacked the Ofgas submission to the Monopolies and Mergers Commission, as 'tantamount to a smash and grab raid on our business' and said that the changes would cost pounds 3bn over 10 years.

Ofgas suggests splitting British Gas into 12 regional supply companies and making it hive off the gas-purchasing arm, perhaps with the British Gas offshore fields. The 12 regional companies would not have a monopoly.

The proposals follow demands by Ofgas that the pipeline and storage system be under separate ownership and control.

Mr Evans said the cost of the 'superficial' proposals could be pounds 166 per consumer or pounds 1,500 per shareholder.

John Dorken, deputy director- general of Ofgas, said: 'British Gas is guilty of unwarranted scaremongering.' He said that the aim was to open up the debate.

Ofgas argues that full competition in gas supply would serve customers better than regulation. 'Greater regulation cannot of itself create full competition.'

The Gas Consumers Council attacked Ofgas's proposals. Ian Powe, its director, said regulation had improved service and lowered prices. Complaints about British Gas had fallen sharply.