Watchdogs inquire into Sweb practices

The regulatory watchdogs for the gas and electricity industries are conducting a joint investigation into alleged anti-competitive practices by South Western Electricity to corner domestic gas customers.

News of the joint inquiry between Ofgas and Offer emerged as competition in the domestic gas market began for the first time today with a pilot scheme among 500,000 households in the South-west.

The gas industry regulator, Clare Spottiswoode, and the electricity regulator, Professor Stephen Littlechild, are investigating claims that Sweb has supplied details of its customers to its subsidiary Sweb Gas but not to the eight other gas suppliers taking part in the trials.

It is also alleged that Sweb has been unfairly promoting its gas subsidiary by putting its promotional literature inside electricity bills.

Speaking on BBC Radio 5's The Financial World Tonight, Ms Spottiswoode said: "It is something we have followed up with Offer, the electricity regulator, and it is something we are very concerned about. We were concerned that putting bill stuffers in their electricity bills was anti-competitive. They claim they got no customers as a result of that. We find that rather odd ... it is something we are still pursuing."

Sweb is owned by Southern Company of Atlanta, Georgia, the US utility that is contemplating an pounds 8bn bid for National Power.

It was the first regional electricity company to be taken over after a pounds 1.1bn agreed bid from Southern last July.

The pilot scheme in the South-west has not got off to as good a start as ministers had hoped.

It had been forecast that 10 per cent of the 500,000 customers in Devon, Somerset and Cornwall would change to a supplier other than British Gas. But despite reductions in bills of 15-20 per cent or more only 35,000 customers have agreed to switch to a rival supplier.

Tim Eggar, the Energy and Industry Minister, who visited Plymouth last Friday to mark the introduction of deregulation in the gas market, nevertherless praised the pilot scheme. "If this level of interest is replicated when competition goes nationwide in 1998 then one and a quarter million consumers would change supplier on the first day," he said.