Gas and electricity customers could lose out as a result of Centrica’s failure to achieve a merger with British Energy, according to M&G, which has significant holdings in both companies. M&G believes that a Centrica/British Energy deal would have been better than the EDF takeover not only for British Energy’s shareholders but also for the country. With Britain’s North Sea gas production in steady decline from its peak in 2000, the country is becoming increasingly dependent on imports. National Grid, which runs the gas and electricity transmission systems, estimates that this winter about half of Britain’s possible supply capacity will be from imports, whether of pipeline gas from Norway, the Netherlands and Belgium, or of liquefied natural gas from countries such as Qatar and Egypt. In continental Europe, most gas supplies are secured on long-term contracts, meaning that the British market is typically used to provide flexibility for suppliers. In the words of one industry expert, Britain is the “swing consumer” of gas: “We are left on tenterhooks to see what European demand will be, and how much will be left for us.” That means British gas prices - and hence electricity prices, which are tied to gas - tend to be more volatile than prices on the Continent, creating difficulties for both business and residential customers. M&G says a merged Centrica and British Energy, as the UK’s biggest retail energy supplier and biggest power generator, would have been in a much stronger position to secure stable long-term gas supplies. In return for providing that greater stability, the new national energy champion would have been allowed to earn good profits, M&G argued. Centrica has also argued that Britain needs a strong national energy company. As the prospect of a deal with EDF over British Energy has approached, however, it no longer makes the point quite so strongly. The government has anyway had little truck with such arguments: all along it has backed the EDF deal, convinced by the French group’s nuclear expertise and financial strength. Falling oil prices, now down almost $50 a barrel from their July peak, have taken some of the heat out of the debate over gas prices and security of supply.

But if there are shortages and prices surge over the winter, questions about the opportunity the government missed may be raised forcefully again.