Pressure builds in gas price row

Britain’s energy-intensive manufacturers this week kept up pressure on the government to act over soaring industrial gas prices.

And an adjournment debate motion to look into the issue was moved in the House of Commons yesterday.

Last week the European Commission said it would investigate the operation of the Bacton-Zeebrugge Interconnector following a request from the British Government. An increase in exports through the pipeline has been widely blamed for hikes of more than 100% in UK prices over the last year.

Last week a report from independent energy consultant Ilex concluded that the price of gas in Continental Europe had been the ‘single most important factor’ influencing UK prices. The study, commissioned by the joint government-industry offshore body Pilot, has been submitted as evidence to the commission’s probe. However, the report dismissed accusations of gaming and manipulation, saying there was no evidence to support them.

But the large UK industrial users are not satisfied that exports through the Interconnector — which account for only about 10% of UK domestic demand — explain why UK prices were higher than elsewhere in Europe. They argue that because there is no additional export capacity, the Interconnector should not influence the price of gas sold in the UK to such an extent.

‘It doesn’t explain why prices have been higher in the UK than on the Continent,’ said Jeremy Nicholson of the Energy Intensive Users’ Group.

Industry Secretary Stephen Byers indicated something untoward was going on with the Interconnector’s operation, describing it as ‘sometimes quite perverse’. For several weeks in October and November gas flowed out of a more expensive UK market.