Held to ransom? Ofgem seeks EU probe into reduced gas supply to U.K.

Held to ransom? Ofgem seeks EU probe into reduced gas supply to U.K.

	Published : Mon, 28 Nov 2005 12:05 By : David Simms Print this Story

LONDON: British energy sector regulator Ofgem has urged the European to Commission to probe why gas exports from European countries to Britain were low in spite of the record gas prices prevailing in the country. It also wanted the EC to specifically inquire whether rules in some countries like Spain had forced the gas prices to remain high so that the supplies do not reach Britain.

Ofgem and the government have been facing an unprecedented situation where shortage of gas prices has forced power stations in the country to cut down production. While Ofgem wants to rule out that the prevailing record gas prices are a result of some manipulation, the government is concerned more because of the weather forecast that the winter this year could be the coldest in a decade and any shortage of gas could be catastropical.

As much as three quarters of homes in the country use gas and residential bills have shot up more than 40 per cent in the last two years and consumers face the prospect of further price rises. Gas prices have reached a record high of 170 pence a therm last week, in comparison, Germany was paying 40 pence with a similar story across other EU member States except Britain.

Ofgem is intrigued because in spite of the higher prices, gas flows through the subsea pipeline interconnector with the continent were running at about half the capacity last week.

Britain's North Sea gas fields are now running out of gas and the country is becoming more and more reliant on European imports. And many of the planned imports can happen only in 2006 or 2007.

European producers seem to be hesitant to export gas as they want to build up stocks for domestic use fearing a severe winter. Curiously in Spain, there is a penalty on international gas suppliers in case they failed to meet their commitments. Analysts say the penalty clause ensures that whatever happens elsewhere, it is better for the gas companies to supply Spain first.

Justifying the demand for an EC inquiry, an Ofgem spokesperson said the regulator needs to determine that the price movements have been caused by supply and demand factors, rather than any distortion of the market. "Consumers need to be satisfied that there are no signs the UK market is being manipulated from Europe."

The regulator has also asked National Grid to confirm that it is not preventing importers from using its newly opened LNG terminal on the Isle of Grain in Kent.

Whether excessive profiteering, holding the British public to ransom or Governmental short-sightedness and bad planning; something needs to be done before it starts costing lives, particularly those of the elderly and poor who simply cannot afford to pay or cope with this extra burden.