§ Mr. DevaTo ask the President of the Board of Trade when he expects to be able to publish the consultative document on opening up the domestic gas market; and if he will make a statement.
§ Mr. Nigel GriffithsTo ask the President of the Board of Trade if he will publish the consultation document on the future of the United Kingdom gas market.
§ Mr. ChisholmTo ask the President of the Board of Trade when the consultation paper on regulation of the competitive gas market will be published.
§ Mr. EggarThe Director General of Gas Supply and I have today published our joint consultative document, "Competition and Choice in the Gas Market". This outlines an approach to bringing the benefits of competition to the domestic gas supply market, and describes the regulatory arrangements which could be put in place. This is a consultation document, and no decisions have been taken.
Comments are requested on certain issues by the end of June, and on the remainder by the end of July. Copies of the document have been placed in the Library of the House. Further copies are available from the Library at the Office of Gas Supply.
The proposals envisage the separation of the business of gas supply, which is increasingly subject to competition, from gas transportation, which will continue to be substantially a monopoly.
The proposed new licensing framework will allow independent suppliers, as well as the British Gas supply business, to have their gas transported through the pipeline system and supply customers. Regulation on the supply business will gradually be relaxed as the benefits of competition flow, although a number of important conditions, such as debt and disconnection, will be retained indefinitely.
Because of the complexity of the issues and the need to feed back experience as it is gained, the introduction of competition will be phased in carefully. For the first two years, the extent of competition will be limited to 5 per cent. and 10 per cent. of the volume of gas sold.
18WA new British Gas network code, to be agreed by OFGAS, will ensure that all approved suppliers—including the British Gas supply business—can use the transportation system on a fair and responsible basis. The document envisages that prices charged by the British Gas transportation network will be controlled by a formula.
The document makes it clear that safety will remain paramount. Broadly, the present system for handling gas emergencies will continue, with the British Gas transportation and storage business responsible for providing the emergency service, including making safe any leak on the customer's side of the meter and the first half hour of any repair work associated with a leak. The transportation business would also handle connections to the network. The Health and Safety Commission will make a thorough study of the safety implications of the proposals in the document.
Special considerations apply to the domestic market they include.
Assurance of Supply
Customers of British Gas at present have a high assurance of supply. We see no reason why the competitive market should not provide a similarly high level of assurance—and the consumer will benefit from the choice provided by competition.Standards of Service
The document recognises the importance of meeting high standards of service, especially in areas such as debt and disconnection, and services for the elderly and disabled. The document proposes that the same regulatory standards should apply in these areas both to British Gas and its competitors.Pricing
The principal effect of competition is likely to be overall downward pressure on costs and prices. Competition is a spur to efficiency, innovation and higher standards of service. Within this overall pattern, small price differentials are likely to emerge gradually as relative prices move to reflect costs.However it will be important to avoid abrupt price movements and a number of proposals are put forward in this area. The document makes clear that:
19Wthe present RPI-4 price formula will continue to apply until at least 1997;the maximum level of standing charge, will continue to be capped at 1986 levels in real terms—at least until 1997;—OFGAS's proposals on transportation standing charges should help reduce any pressures to raise prices for the average small consumer;—during the transitional period between 1996 and 1998, it is expected that no British Gas published tariff will increase by more than the rate of inflation, taking one year with another and apart from factors outside the control of the gas supply industry.Energy Efficiency
The document considers whether it might be reasonable to broaden the director's powers in this area. It also suggests that suppliers should be enabled to sell total energy packages, including both gas and energy saving measures, so that least cost planning can be undertaken by consumers at the level of the individual kitchen.Comments are requested on the points raised in the document. On certain issues of direct relevance to the preparation of draft legislation—which are marked at the end of each chapter—comments should be received by the end of June 1994. For other issues, comments can be received up to the end of July.
§ Mr. Nigel GriffithsTo ask the President of the Board of Trade what consideration he has given of the impact on low-income gas consumers of a 2 per cent. premium on gas bills to achieve the Government's energy conservation targets.
§ Mr. EggarThe Government are committed to achieving the Rio target and look to energy efficiency programmes devised by the Energy Saving Trust to make a sizeable contribution to meeting the target. Consideration is being given to the means of financing these programmes, including their costs to gas consumers. No decisions have been taken.