Ofgas on collision course over energy-saving schemes

OFGAS, the gas industry regulator, is heading for a clash with the Government over energy-saving schemes, including combined heat and power projects, which could cost gas consumers hundreds of millions of pounds yet benefit relatively few people, writes Mary Fagan.

Clare Spottiswoode, the new director-general of gas supply at Ofgas, said she had already been asked by the Government's Energy Saving Trust to raise pounds 750m by the end of the decade to promote two energy efficiency schemes. The money would be raised through the British Gas price control formula, which allows energy-saving measures to be passed through to customers.

Ms Spottiswoode told the Trade and Industry Select Committee that the ability to promote energy savings through the formula was intended to enable British Gas to view greater energy efficiency as a commercial alternative to making new gas purchases in the North Sea. But she said it had been 'hijacked' to help the Government meet its environmental commitments.

She said she intended to raise the matter this week with Timothy Eggar, the Energy Minister at the DTI. Ms Spottiswoode said she was in favour of saving energy but questioned whether that should be the regulator's role.

'What I object to is being asked to impose a policy on the gas sector that amounts to a regressive tax,' she said.

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