'Confusion' fears over regional gas bills

By Ben Morris
Business reporter, BBC News

Npower says differences in regional prices reflect costs of delivery

The UK's biggest power firms are changing the way they charge for gas.

Instead of one price across the country, they are moving towards regional prices - a strategy which consumer groups say will make a confusing situation worse.

On Friday Npower announced prices changes that mean, on average, customers in London and the East Midlands will pay around £45 more for gas a year than those in the South West or North West.

Npower is now the third of the big UK power suppliers to introduce such a strategy. Customers at ScottishPower and Scottish and Southern can also expect to pay different amounts for gas depending on where they live.

Those that watch the energy market expect all the power firms to follow suit.

'More confusion'

Companies will take this oportunity to target the areas where they want to retain customers or attract new business Energywatch

Npower says the difference in regional prices reflect the different costs for piping gas to customers around the country.

But industry watchers are not convinced that is the whole story.

The UK's gas pipelines are owned by four companies and the amount they charge companies like npower is regulated by the government.

Their cost accounts for about 16% of the average gas bill and is due to rise in April by only £2 per customer.

Energywatch has another explanation.

It says: "The wide range of price changes announced by Npower, and likely to be followed by others, suggests that companies will take this oportunity to target the areas where they want to retain customers or attract new business."

"The impact for consumers is yet more confusion in an already complex marketplace."

'Loyalty tax'

Regional pricing has always been the case in the electricity market.

According to to price comparison website, Uswitch, the trend has been that, customers in areas where a company used to be dominant are offered more expensive deals than elsewhere.

It says: "Electricity companies are imposing a £32 or 10% 'loyalty tax' on customers living in the regions where they used to be the monopoly supplier."

Npower average electricity bill Northern region - £475 a year East Midlands - £397 a year Npower average - £425 a year Source: Uswitch

But it is not clear if that will happen to gas prices. The industry used to be dominated by British Gas which has never had a home region.

British Gas says that it has no current plans to introduce regional pricing.

However, industry watchers believe that it will be forced into such a strategy in order to match the pricing policies of rivals like Npower.

Dual fuel dilemma

So-called dual fuel plans complicate the picture further.

Many of the best deals now involve buying electricity and gas from the same supplier, so while your electricity might be a bargain, a new regional price for your gas might make it a less attractive deal.

For consumers, it means that it is more important than ever to keep on eye on the best deals around.