BBC

Friday, 22 December, 2000, 12:56 GMT Gas price rises face probe

Regulator Callum McCarthy recommended a price investigation The UK government says it will ask the Office of Fair Trading to investigate rising gas prices.

The warning comes as a succession of gas suppliers have either increased, or are about to increase, prices, adding an estimated £15 to the average bill.

They say they are having to take that action because the wholesale price of gas has more than doubled in the UK during the year.

In addition to these rises, Ofgem, the industry regulator, earlier this month warned that 14.5 million customers may face increases from April when British Gas, the UK's largest supplier, is freed from pricing constraints.

Prices under investigation

The reason for the sharp increase in wholesale gas prices has been highly controversial, and Ofgem originally recommended that the UK's Department of Trade and Industry investigate.

Industry insiders suspect that gas producers are illegally limiting the amount of gas flowing into the UK's gas transmission system in order to push the price artificially high.

These price rises will force the UK's second largest gas-supply firm TXU Europe, owner of Eastern Energy and Norweb., to increase its prices in the New Year.

"These kinds of costs feed through into what the consumer pays," TXU spokesman Christian Judge told BBC News Online on Friday.

While the firm has yet to decide when to raise bills, or by how much, the increase is likely to be in line with the 5% rise imposed at the start of the month by rivals Seeboard, and Scottish and Southern Energy.

Northern Electric raised prices for its gas customers by 4% at the start of October.

-- Rachel Gibson (rgibson@hotmail.com), December 22, 2000