Midlands Electricity to supply residential gas

Midlands Electricity, which was taken over earlier this year by two US utility groups in a pounds 1.8bn deal, is to launch an assault on the residential gas market.

Midlands was one of the first regional electricity companies to pile into the industrial gas business in 1992 with its subsidiary, Midlands Gas, which has around 10,000 customers.

However Midlands, which has 2.2 million electricity customers, decided not to take part in the trial of domestic competition under way for 500,000 homes in the South-west.

Managers are still finalising details of their plan, which will be formally announced in the next couple of weeks. It could begin by marketing gas outside Midland's area in the second stage of the competition trial, due to take place next year in other parts of the south of England. Full competition for all households is planned by the gas watchdog, Ofgas, for 1998.

Other regional electricity firms, including Sweb and Eastern, are already supplying gas to households in the Devon and Cornwall trial, though theyfound it harder to persuade people to move from British Gas than some observers had predicted. Midlands will also face stiff competition from oil and gas companies, including Total, which has a joint gas marketing venture with London Electricity.

The news emerged as Midlands announced the retirement of its chairman, Bryan Townsend. He will be replaced from September by James Leva.