MPs may look into gas deals

MARY FAGAN

Industrial Correspondent

The House of Commons Trade and Industry Select Committee may launch an inquiry into British Gas contracts with North Sea producers that are forcing the company to pay hundreds of millions of pounds for gas which it cannot yet sell.

The Gas Consumers Council has called for the investigation because it fears that consumers rather than shareholders will end up footing the bill for the contracts. Martin O'Neill, the chairman of the committee, confirmed that the issue would be discussed at a meeting next week. British Gas said that it would co-operate fully in any inquiry.

The issue exploded at the end of last year when Clare Spottiswoode, the industry watchdog, warned that the problem could pose a threat to British Gas's financial security.

She is currently considering whether some of the cost of the contracts should be passed through to consumers through the domestic price control formula.

British Gas has appealed for government support in renegotiating the contracts or in finding some other solution to its predicament.

The company argues that the contracts were entered into when it had a monopoly in the supply of gas and that the Government, by opening up the market, should take part of the blame. One solution mooted is that other gas suppliers should help to pay through a levy on the use of the pipelines, but the GCC argues that ultimately this too would hurt consumers.

Ian Powe, director of the GCC, said: "Whoever is at fault it is not customers." Mr Powe said he had no desire to see British Gas "go to the wall" but that the Trade and Industry Committee could at least ensure that all the issues were fully and fairly aired.

"Until we are given all the facts we must resist any notion that consumers should pay," he said.