High energy users plan to petition gas regulator

Energy-intensive manufacturers are preparing a formal complaint to the gas regulator after prices reached a peak last week that was 40% higher than at the start of the year. The hike in one-year gas contracts from 15p to 25p a therm threatens to cost steel manufacturer Corus, the largest individual buyer of gas in the […]

Energy-intensive manufacturers are preparing a formal complaint to the gas regulator after prices reached a peak last week that was 40% higher than at the start of the year.

The hike in one-year gas contracts from 15p to 25p a therm threatens to cost steel manufacturer Corus, the largest individual buyer of gas in the UK, an additional £40m a year.

The Chemical Industries Association, whose members include the biggest consumers apart from Corus, has engaged consultants to prepare a submission that it will put to regulator Ofgem later this month.

The problem has largely arisen from bottlenecks in the transmission system, particularly at the landing point of St Fergus in Scotland, which has led gas shippers to increase sharply their bids for capacity.

The CIA and other large user groups also believe big shippers are manipulating the system at industry’s expense. `My biggest concern is that some of this is to do with market power,’ said a senior figure at a large gas user.

Ofgem appeared to support such claims last week in a letter to shippers warning them not to undersupply gas in the early part of the day to ramp up prices on the spot market. It pointed out their licences required them to supply contracted gas evenly throughout the day and threatened withdrawal of licences if the practice continued.

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