Fuel bills rocket as the gas is cut off

Interruptible contracts mean firms face doubled energy costs

Gas cuts seem certain to add millions of pounds to industry’s fuel bills this week, as large users are forced to switch to much more expensive heavy fuel oil or gasoil.

TransCo, the distribution arm of British Gas, informed gas suppliers on Monday that it would exercise interruptible contracts – where big customers get cheap fuel in exchange for allowing their supply to be cut for up to 45 days a year. TransCo told suppliers to interrupt all such customers in south west England and 75% of those in South Wales at least for Monday and Tuesday. Further interruptions were expected in five more of TransCo’s 13 distribution zones.

Eddie Proffitt, chairman of the gas group on the Major Energy Users’ Council, said the alternative fuels cost more than twice as much. `If it’s heavy fuel oil, you’re talking probably two and a half times the price of gas – and about three and a half for gasoil.’

Big users are reluctant to say how much the loss of gas supply is costing them, but one large factory in the north of England faces an additional bill of £15,000 a day. Two British Steel plants at Llanwern and Port Talbot in South Wales, which will certainly be affected by this week’s cuts, are probably each looking at double this amount.

Proffitt said the large users accepted the interruptions as necessary as the cold weather puts constraints on the transmission system. Unlike last year, users are not claiming that the cuts come as as a result of suppliers getting their sums wrong.

There is unlikely to be a knock on effect on gas-fired power stations, as following last year’s scare that gas cuts could put the lights out, the electricity pool has agreed to compensate generators who have their gas interrupted.