Regulators look into `dual fuel' offers to domestic customers

The electricity and gas regulators yesterday launched an investigation into claims that power companies were rigging the market to prevent competition for domestic consumers taking off fully next April.

Ofgas and Offer announced they were examining so-called "dual fuel" offers whereby customers were sold gas and electricity in one package.

A joint statement from the two regulators highlighted claims that some electricity companies may be engaged in predatory pricing by supplying gas at below cost in order to tie households into buying their electricity as well.

"The offer of dual fuel supply can bring benefits to customers in terms of lower prices. On the other hand it would be undesirable if the advantages enjoyed by the public electricity suppliers gave them the opportunity to exploit and prolong their monopoly power," the statement added.

The gas market is already partially open to competition with 4.5 million of British Gas's 19.5 million customers now able to shop around. However, the electricity market will not begin to open to competition until next April. Liberalisation will then be phased in over a six-month period.

Centrica, the supply and trading arm of the old British Gas, has complained that the dual fuel offers now available from electricity suppliers could hamper its ability to break into the electricity market from next April with prices that undercut the RECs by 15 per cent. A Centrica spokesman welcomed the inquiry