British Gas plc continues to protest as government regulator Office of Gas Supply (Ofgas) pries the former monopolist's businesses out of its hands to offer to new competitors.
Ofgas has published final proposals setting out prices BG's Transco unit can charge other suppliers to deliver gas through the Transco grid.
When the Ofgas proposals were first unveiled, BG complained Transco would have to lay off half its 20,000 staff to meet the required transportation price cuts (OGJ, May 20, Newsletter).
Ofgas later disclosed plans to further trim customer costs through cuts in billing and marketing costs. These later proposals are smaller and less contentious (OGJ, July 22, p. 27).
Responding to final transportation cost proposals published Aug. 21, BG complained Ofgas' plans had been only slightly modified. The company also protested three new proposals published the same day.
Philip Rogerson, BG deputy chairman, said, "After 3 months of dialogue, we remain of the view that Ofgas' now slightly modified proposals are not in the interests of shareholders, consumers, or employees. British Gas is, however, hoping that Ofgas will amend its proposals significantly and we will continue the dialogue."
BG also said Ofgas' new and long-awaited proposals to unbundle storage, supply connection, and metering activities into separate businesses, all open to competition, are far-reaching.
"These activities represent £3 billion ($4.5 billion)," BG said, "or almost 20% of Transco's total assets. They employ about 4,000 people, some 20% of the total work force.
"According to Ofgas, unbundling will result in removal of £400 million of regulated income in 1997/98 and subsequent years. It is essential that an equitable basis is established for these activities once they are in the competitive famework."
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
