British Gas is waiting to find out whether it can go ahead with a new price structure which critics say discriminates against some of its poorest customers.

The former monopoly's British Gas Trading branch wants to exclude people who use pre-payment meters from price cuts being implemented next week.

The industry regulator, Ofgas, is expected to decide by the end of this week whether the proposals are fair.

Pre-payment meters are preferred by many people on low incomes

Critics say the new price structure will mean those with pre-payment meters - including many pensioners and those on low incomes - will pay 25% more than customers paying by direct debit.

Waiting for all-clear

British Gas Trading plans to cut customers' bills by 9% but says pre-payment prices will remain the same.

British Gas announced the cuts last September and said they would take effect on January 12. But they cannot go ahead without the all-clear from Ofgas.

An Ofgas spokeswoman said on Thursday: "We expect an imminent decision on this matter."

Around one million customers use pre-payment meters to pay for their gas.

Smartcards enable them to charge up the meter and the supply is cut once the money is used up.

Sue Slipman: "British Gas cannot be allowed to get away with this"

Sue Slipman, director of the Gas Consumers' Council, says: "British Gas Trading are using price cuts elsewhere, which ought to benefit all consumers, to benefit a few consumers so they can gear themselves up to fight competition."

She says many of those using pre-payment meters are on low incomes, do not have bank accounts and do not have the chance to switch to direct debit.

"Prior to nationalisation the differential between those on meters and those on direct debit was 14%. It is now 26%.

"British Gas Trading cannot be allowed to get away with further widening the differential."

British Gas, which split into separate production and retail businesses in a demerger last year, says the meters are expensive and it is trying to encourage more people to switch to direct debit payment.

British Gas Trading said: "The technology and administrative support needed by pre-payment customers is extremely expensive. They cost the company more than they are charged."

Price reductions are prompted by Transco, the pipeline-laying arm of the British Gas demerger. It has been forced to make drastic cuts in the charges it makes to gas suppliers.

Neil Lambert, marketing director with one of British Gas Trading's new competitors, Calortex, says: "Effectively what British Gas are doing is passing on the reduction in transportation costs but they are doing it in a way that is discriminatory."
 

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