Britain is the largest natural gas producer and the largest gas consumer in Europe. Natural gas consumption has doubled in the last ten years. The British energy industries have been liberalised more comprehensively than in any other country. In 1985 British Gas had a monopoly of all sectors of the gas market in Britain and it was the largest vertically integrated natural gas utility in the world. In 1986 the company was privatised and in 1998 Britain was the first country in the world to open its gas market to all consumers, from large industry to household consumers.

Industrial gas prices have fallen by 40% between 1980 and 2000 in real terms. British Gas has been split into three companies; BG plc - exploration and extraction, Transco - transport of gas, Centrica - supply and marketing of gas and electricity. Transo owns and operates the high pressure National Transmission System (NTS) and together with 10 IGTs Independent Gas Transporters), sells to 22 leading shippers (there are 90 trading) and 14 suppliers. Licensed shippers trade gas and capacity on the NTS and sell to suppliers. Gas is physically supplied by the IGTs to large customers and by LDZs (Local Distribution Zones) to small and domestic customers.

Competition is intense as the gas and electricity markets converge. Centrica has lost 33% of domestic customers but has gained the second largest share of sales of electricity. In two years from market opening, new suppliers had gained 20-30% of the UK market from British Gas. A range of new businesses has opened up as activities are spit off from the main players; connections, metering, data consolidation.

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