U.K. gas problems

Pipeline companies are all the time finding smarter ways to build and operate pipelines. Unfortunately, U.K. gas users are finding that these benefits do not automatically pass along to the customer. Here, gas market liberalization is not yet complete, and already users are complaining. Worrisome from the industry viewpoint, the government has decided to step in. Large gas, electricity, and water users, represented by the Utility Buyers' Forum (UBF), based in Sleaford, Lincolnshire, claim

April 13, 1998

3 min read

David Knott
London
[email protected]

Pipeline companies are all the time finding smarter ways to build and operate pipelines.

Unfortunately, U.K. gas users are finding that these benefits do not automatically pass along to the customer. Here, gas market liberalization is not yet complete, and already users are complaining. Worrisome from the industry viewpoint, the government has decided to step in.

Large gas, electricity, and water users, represented by the Utility Buyers' Forum (UBF), based in Sleaford, Lincolnshire, claim that bureaucracy has stifled any potential benefits from competitive supply.

Peter Rost, UBF chairman, told a recent conference, "The administrative cost of competition in gas and electricity in particular is making the decision by business to buy in the competitive market too close to call."

Rost said that gas and electricity customers wanting to change supplier have been so dogged by red tape that 20,000 eligible sites in the industrial and commercial sector have shown themselves unwilling to risk change.

Green paper

UBF cites supply-point administration and billing disputes as the main bugbears in the gas market. The forum also sees a detrimental effect on business gas users of increased use of gas by power generators.

In a bid to smooth the transfer of utilities from state control to free market, the government has published a green paper setting out proposals to ensure that consumers get a fair deal.

Margaret Beckett, president of the Board of Trade, said, "For too long, householders who pay the gas, electricity, water, and phone bills have felt that shareholders' interests have come first."

Industry regulator Office of Gas Supply (Ofgas) is investigating a growing number of complaints about dubious sales practices among independent gas suppliers.

Energy Minister John Battle said, "It is deplorable that there are still so many incidents of consumer abuse when gas contracts are sold on the doorstep. The interests of consumers, particularly the more vulnerable, such as the elderly, must be protected as competition moves forward."

Government proposals

Beckett said, "Our proposals will keep the pressure on the utility companies and the utility regulators to drive prices down and standards up and provide more choice for all. For the first time, consumer interest will be put at the heart of the regulatory system."

Among key proposals are: regulators should be given a new primary duty to protect the interest of customers; consumer bodies for each sector should be put on an independent basis; and regulation of gas and electricity supply should be integrated.

"The privatized utilities were sold too cheaply," said Beckett, "and price controls set by the previous government on privatization were too lax. The result was a bad deal for consumers and for taxpayers.

"It is time now to learn lessons from the existing regulatory regime-both its strengths and its weaknesses-to ensure that consumers are better served in future."