ANOTHER VIEW; The rate for regulating gas

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The Independent Online
Some newspapers can't quite make up their minds whether to call me a cat or a sow. Either way I am alleged to have my snout in the trough.

The truth is, I am having discussions - which have been going on for several months - with the Department of Trade and Industry about my pay and conditions.

Before I explain why, let's look at the job I do. The decisions of regulators affect the lives of virtually everybody in the country. In my patch, any decisions I make affect 18 million domestic gas consumers, and also a large part of British industry. Although I am appointed for a five-year term by the Secretary of State for Trade and Industry, I am independent of government. This means I have time to get to know the gas industry well and am in a stronger position than, say, a government minister to exert pressure on management to perform.Unlike a minister, I am not governed by short-term political considerations.

And the system works. Since British Gas was privatised in 1986, domestic prices have fallen by 20 per cent in real terms, and industrial and commercial prices, now open to competition, have fallen by 35 per cent. British Gas says that regulation since privatisation has cost it pounds 3bn. Without a regulator, this would have been passed on to the customer.

As well as keeping gas prices down for domestic consumers, I protect customers against bad standards of service while they have no other choice of gas supplier. My current task is to set a framework for a fully competitive gas industry that will benefit the people and the economy of Great Britain. This means setting pricing rules, for example, that ensure sensible investment decisions are taken. Providing we get the framework right, over time, this will significantly reduce prices.

The Gas Bill being debated in Parliament will allow full competition in the industry. Careful judgements are involved. No other country has gone as far in introducing competition into its gas market.

I took this job in September 1993. At that time the likely timetable for full competition was after 2000 and legislation was no more than a dream. I took the post on the understanding that it would not keep me fully occupied and I would be able to fit in at least two other appointments. This is a usual arrangement in jobs like mine.

Within two months of my appointment, the timetable changed. Legislation within a year and full competition by 1998 became a real possibility. Gas regulation became virtually a full-time six-days-a-week job, and obviously this left less time for additional appointments than had originally been anticipated. So far, I have not taken any, though I think in principle it is right for someone in my position to benefit from the wider perspective a variety of appointments brings.

A few months ago, I drew this to the attention of the DTI, and suggested that my salary was brought more into line with that of other regulators. These discussions are continuing. Once I know the outcome, I will publish my salary.

The writer is the Director General of Gas Supply.

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