HC Deb 27 April 1989 vol 151 cc615-6W
Mr. Maples

To ask the Chancellor of the Duchy of Lancaster whether the Government will implement the recommendation of the Monopolies and Mergers Commission report on gas (Cm. 500) that British Gas should be required not to contract initially for more than 90 per cent. of deliveries from any new field within the United Kingdom continental shelf.

Mr. Maude

The Government accept the objective of the MMC recommendation, but believe that it can best be achieved in a modified way. They have therefore set as a target that 10 per cent. of the gas coming forward from new gas fields should be supplied to the market by suppliers other than British Gas. This target, which covers gas both on the United Kingdom continental shelf and imported, includes gas carried both by British Gas on a common carrier basis, and by any new dedicated pipelines that may be built by carriers other than British Gas. For the purposes of this target, all gas supplies contracted from producers after 31 May 1989 will be taken into account. However, a small number of large deals involving limited classes of customer will not of itself secure the early development of competition for the benefit of industrial and commercial contract customers for gas which is required. During the first two years in which the target operates the Government will monitor the position closely and will pay particular attention to the level of sales contracted into the general industrial and commercial gas market. The Department of Energy will publish the outcome against target for the years ending 31 May 1990 and 31 May 1991 and, within that, the level of sale to industrial and commercial contract customers achieved.

I was attracted by the possibility of placing a ceiling of one or 2 per cent. on each contribution towards the target from a single customer's usage at a single site but decided against such a specific ceiling lest it distort the development of the market. However, when the arrangements are reviewed in July 1991, attention will be focused particularly on the size and diversity of gas users no longer solely dependent on British Gas. If progress towards the establishment of a competitive market is not satisfactory by that time, I may resort to order-making powers under the Fair Trading Act which flow from the adverse findings in the report by the Monopolies and Mergers Commission.

I am inviting the Director General of Fair Trading to seek an undertaking from British Gas under section 88 of the Fair Trading Act 1973 actively to facilitate the efforts of gas producers towards achievement of this target both in its contracting arrangements and, in particular, by agreeing as appropriate to carry the relevant quantities of gas as a common carrier.

In addition the Government will continue to explore all means of developing competition in supplying gas to business users.

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