British Gas service charge rise 'massive'

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ThE gas industry watchdog has accused British Gas of 'massive' increases in its central heating service charges. According to Ofgas, the increases of up to 11.8 per cent are negating the benefits of recent cuts in gas prices for millions of customers.

Under pressure from the regulator, British Gas has introduced reductions in gas prices worth about pounds 20 a year for an average household.

However, Sir James Mc Kinnon, director general of Ofgas, said the savings had been halved for many customers who used the company to maintain their central heating systems. The Ofgas attack on the 'swingeing' hike in the servicing price marks a new low in relations between the watchdog and British Gas.

'People should not be brainwashed into thinking that because they get gas from a monopolist supplier they must also have their system serviced by the same supplier.' Sir James said.

British Gas also came under attack from the Gas Consumers' Council, which accused the company of exploiting customers and ignoring the plight of people in a time of recession. The council also criticised a 13.5 per cent increase in the charge for installing new central heating systems, which came into effect in the new year.

Ian Powe, the council's director, said: 'These price increases are unacceptable. It is quite in contradiction of British Gas claims that they put the customer first.'

British Gas has 25 per cent of the regular service market, which means it has contracts with 2.6 million customers. It also claims 18 per cent of the market for installing gas central heating.

He said the service and central heating price increases were a direct attempt by the company to claw back lost profits in the industrial and commercial gas supply market. In the nine months to September 1992, the company's profits from gas supply fell to pounds 393m from pounds 688m in the same period a year earlier.

Ofgas was also concerned over variations in service charges. Customers in the Eastern region pay over pounds 91 a year while those in the South-west and West Midlands pay about pounds 78.

Yesterday, Simon Kirk, British Gas's director of marketing, accused Ofgas of 'astonishing allegations' and rejected any suggestion that new costs had been 'slipped into bills'. The company said the increases in servicing charges had been in place since April and averaged 7.6 per cent.