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CC forces LPG suppliers to provide a better deal

The liquefied petroleum gas (LPG) industry has provided a muted response to the Competition Commission's (CC) Draft Order (DO), published last week, which aims to force a change in the way the industry operates.


Under the DO, suppliers of LPG must comply with a customer's request for a tank transfer when a customer wishes to change supplier, to make the switching process easier, to improve the terms of customer contracts and to provide customers with better information.


The DO follows the publication of the CC's final report into the domestic bulk LPG market, which confirmed its provisional conclusion, reached in August 2005, when it found that there 'are features of the markets for the supply of domestic bulk LPG in Great Britain and Northern Ireland which adversely affect competition in the UK'.


The investigation also found 'that the large majority of customers in the market are paying higher prices than would be the case if these features did not exist'.


A CC spokesperson added: 'One of the key problems with this market is that it is not regulated by the Office of Gas and Electricity Markets, and therefore it is not open to public scrutiny. Also, because customers tend to be located in rural areas where there is no access to the mains gas network LPG suppliers have a captive market.


'There are approximately 150,000 households in the UK which rely on LPG to provide heating, cooking and hot water. LPG is more expensive than mains gas and will become more so because of recent energy price rises.


'We hope this package of remedies, which comes into effect later this year, will create some widespread changes in the LPG industry. We'd like to see a more competitive market, opened up to more suppliers, which should result in a better deal for the consumer. If anything, the DO should make it easier for consumers who use LPG for heating and cooking to switch suppliers.'


Andrew Ford, communications manager with Calor, the UK's largest supplier of LPG, said: 'We have been expecting this for some time now and we are still in the process of absorbing all the detail. We will be responding by the August 1 consultation deadline. This needs to be analysed more fully before we can provide any detailed comment.


'What the implications are for the industry is hard to tell at this stage. What we can say is that the DO will result in a different structure for the LPG industry. How consumers will respond to that new structure, only time will tell - we're not even sure that consumers will begin to switch suppliers.'


Rob Shuttleworth, chief executive of the UKLPG, the trade association for the LPG industry in the UK, said: 'UKLPG has been working closely with the CC and our members since the initial investigation and we will continue to do so throughout the remainder of the process.


'We are currently reviewing the detail of the latest version of the order and will be responding as requested. We welcome this final opportunity to comment and will be working to ensure the smooth implementation of the order.'