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Royal Dutch Shell Plc .com: Watchdog orders curbs on LPG bills

By: Michael Harrison Business Editor,
The Independent – United Kingdom
Published: Jun 30, 2006

Thousands of rural households that rely on LPG for cooking and heating are being overcharged by a handful of dominant suppliers, including two giant oil companies, the Competition Commission ruled yesterday.

Unveiling plans for a shake-up in the market, the commission said that prices were higher than they needed to be because the big four LPG firms – Shell, BP, Calor and Flogas, which control 90 per cent of the market -discouraged competition and made it difficult for households to switch to other suppliers.

BP is also under investigation in the US for allegedly fixing the price of propane used by millions of Americans for cooking and heating in trailers and rural homes. A former BP energy trader has already pleaded guilty to federal charges of conspiracy to manipulate prices.

About 150,000 UK homes, mainly in rural areas, have to use LPG for cooking and heating because they do not have access to mains gas. In 2003, the latest year for which the commission has figures, the average LPG bill was pounds 800 – more than double the amount typically charged by British Gas.

After a year-long investigation, the commission has announced measures to increase competition and bring down prices. Key among these is that customers will henceforth be allowed to switch supplier without having to have a new tank installed. At present, they have to pay the upfront costs of one tank being replaced by another.

The commission also intends to outlaw the use of lengthy fixed-term contracts and notice periods which tend to be found only in the UK.

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