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Centrica to lose price cap
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December 1, 2000: 6:13 a.m. ET
U.K. gas regulator to lift restrictions on prices, citing growing competition
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LONDON (CNNfn) - Britain's energy regulator said Friday it would lift price controls on Centrica PLC's British Gas Trading, the leading U.K. gas retailer, because increased competition had reduced the former monopoly's market power.
The Office of Gas and Electricity Markets, or Ofgem, said the proposal, to take effect from April, reflects the fact that 6 million gas users have already chosen an alternative gas suppliers while 60,000 more continue to switch suppliers every week.
"Competition in gas supply is strong," Ofgem Director General Callum McCarthy said in a statement. "We can now lift the last price caps for BGT, provided they do not increase the differential between those tariffs where competition is most fierce and those where it is not so strong."
Centrica, which has been expanding its telecommunication and electricity businesses to cushion the decline in the number of its gas customers, would need to promise not to widen the gap between its domestic tariffs and to maintain one payment plan for at least one year. The gas firm must also make progress in allowing customers who are in debt to switch supplier.
 Investors cheered the news, sending Centrica shares (CAN) up 2.8 percent to 243 pence in early trade.
Ofgem said the proposals will benefit all of British Gas Trading's U.K. customers and will specifically protect customers on certain payment schemes.
"We are very pleased that regulators announced their intention to remove price controls, in recognition that gas competition is sufficiently established," Centrica spokeswoman Lilas Allen said.
The company expects to respond to the regulator's proposal by Jan. 10, the end of Ofgem's period for soliciting industry participants' views on the plan, she said.
Ofgem said it had an alternative price control scheme if Centrica rejected the proposal. A final plan would be put forward in February.
Centrica was formed following the 1997 break-up of British Gas into separate entities focusing on gas transportation, exploration and production on the one hand, and gas marketing on the other. It retained the right to use the nationally recognized British Gas name in its marketing activities. 
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Centrica
Ofgem
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