British Gas accused of scaremongering

MARY FAGAN

Industrial Correspondent

Ofgas, the gas industry watchdog, is to complain to British Gas over scaremongering about safety in the gas pipeline system as competition in the marketplace is introduced.

Cedric Brown, chief executive of British Gas, warned last week against moving too quickly to liberalise the market for installing gas meters and making new connections - activities carried out by its pipeline arm, Transco.

Mr Brown said: "The concern we have is that, if you fragment these operations, you will not have the reservoir of people to draw on in response to emergencies. We must not, repeat must not, put safety at risk."

Mr Brown's public comments angered Clare Spottiswoode, the director general of Ofgas. One industry source said that the watchdog feels British Gas is "using the safety issue in a pretty inappropriate way".

"There is a view that scare stories over safety are being used to slow the whole process. Clearly there are safety implications and those will be taken fully into account. But the issue is only beginning to be discussed and nothing is decided yet." Ofgas is expected to meet the Department of Trade and Industry and Transco over the next few weeks to explore ways in which Transco could be exposed to competition.

Mr Brown said that he was happy to see rivals enter markets such as meter- reading, but he worried about competition going too far. The pipeline is only one big issue facing the regulator and the industry over the next few months.

Ofgas is also preparing to issue a wide-ranging consultation document on the future of gas prices for domestic consumers and the competitive gas marketplace. The document is expected to raise issues including whether sharp falls in gas prices on the spot market - such as those seen in recent months - should result in a drop in consumers' bills.

Fluctuations in gas prices have become an important issue for British Gas. At present the company is locked into long-term contracts with offshore producers at about twice the spot price, allowing rivals to buy much cheaper gas and take a greater share of the industrial and commercial gas market where competition is allowed.