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Last Updated: Tuesday, 12 September 2006, 20:06 GMT 21:06 UK
Ofgem warns gas firms over bills
Gas ring on cooker
Gas firms could face large fines if the "behave badly"
The head of energy regulator Ofgem is warning it will "go after" gas companies who fail to pass on falling wholesale prices to customers.

Customers have continued to see rounds of gas price rises, with suppliers blaming the cost of the gas they have already bought for the coming winter.

But the wholesale price has fallen around 20% from record levels.

Now the regulator is warning gas companies they must respond if that trend continues.

Ofgem head Alistair Buchanan told BBC News he was cautiously optimistic that new supplies of gas would help bring prices down and insisted serious questions would be asked if this did not happen.

If we felt that any of the companies were keeping jam on their fingers we would go after them

A new pipeline bringing gas from Norway comes on-stream this weekend, easing the shortage of supplies which helped push prices higher. Pipelines from Holland and Belgium, and an LNG site at Teesside are also imminent.

"What that means is on the coldest day of the year we should have 20% more supply than last year," Mr Buchanan said.

He added that industrial and commercial customers who bought direct from the market would see the first benefits before domestic customers - probably six to 12 months later.

"The job of Ofgem is to give customers protection and comfort that the prices are real and not fixed in any way," he said.

"If we felt that any of the companies were keeping jam on their fingers we would go after them.


"As prices have gone up the companies have been highly competitive with each other on both product and prices - as prices go down we'd expect them to do the same - if they don't that would start leading us to ask questions."

He added the regulator could fine companies up to 10% of their global turnover if it found they were "behaving badly" in the marketplace.

British Gas is already offering a two-year product where the second year is offering a price fall. Scottish and Southern says it anticipates prices will drop.

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