British Gas backpedals on U.K. disputes

British Gas plc has backed down from two potential fights with government, one over taxes and one over moves to cut prices to consumers. FormatDocument In July, British Gas filed suit against U.K. Department of Trade & Industry (DTI) to recover £ 1 billion ($1.5 billion) in taxes paid under the Gas Levy Act of 1981 (OGJ, Aug. 12, p. 34). The former gas supply monopolist now says it will not proceed with the action: "Following consultation with the DTI, the company is now satisfied that the

Nov. 25, 1996

2 min read

British Gas plc has backed down from two potential fights with government, one over taxes and one over moves to cut prices to consumers.

FormatDocument In July, British Gas filed suit against U.K. Department of Trade & Industry (DTI) to recover £ 1 billion ($1.5 billion) in taxes paid under the Gas Levy Act of 1981 (OGJ, Aug. 12, p. 34). The former gas supply monopolist now says it will not proceed with the action: "Following consultation with the DTI, the company is now satisfied that the Gas Levy legislation has been applied correctly and will therefore not be pursuing its claim."

British Gas has also accepted proposals by government regulator Office of Gas Supply (Ofgas) for a new domestic tariff formula and a reduction in charges to customers for billing. Philip Rogerson, deputy chairman of British Gas, said of the tariff formula acceptance: "When the initial proposals were put forward in June, we had a number of serious concerns. Although we still believe the proposals are tough, we expect to accept them as long as they are unchanged following the statutory consultation period."

Ofgas and British Gas also agreed on proposals to cut residential gas bills by an average £ 7 ($10.5)/year but trimming charges for billing, marketing, meter reading, and customer service. This proposal was not strongly challenged by British Gas, unlike a parallel plan to cut residential customers' bills by more than 20% through reduced transportation costs. Ofgas has referred this dispute to the U.K. Monopolies & Mergers Commission, in a bid to force it to accept the plan (OGJ, Oct. 14, p. 24).