§ Mr. Hardy asked the Secretary of State for Energy if he will explain without reference to mathematical formulae the basis upon which gas price increases are to be controlled or influenced following privatisation.
§ Mr. Buchanan-SmithThe price of gas to tariff customers will be strictly controlled by reference to changes in the retail price index and changes in gas costs. The maximum price (covering both standing charge arid rate per therm) that can be charged will be determined by the price formula set out in the licence.
The price formula itself is in two parts:
(i) a part relating to the cost of gas purchased (Y in the formula) which provides for changes in gas costs to be directly reflected in the maximum price. At present the cost of gas accounts for about half of the price customers pay.(ii) the remaining part of the price (RPI—X in the formula) which is limited to X per cent. below the rate of inflation. This puts a discipline on the company to achieve real reductions in the non-gas costs under its control and will ensure that customers take a share of the benefit. The value of X, the efficiency factor, will be set when the scope for improved efficiency has been assessed.Mr. Parry asked the Secretary of State for Energy what recent representations he has received from the Trades Union Congress concerning the proposed privatisation of British Gas.
§ Mr. Peter WalkerI refer to the answer I gave earlier to my hon. Friend the Member for Harrow East (Mr. Dykes).