Ofgem moves to
secure winter gas supplies
Jun 18, 2006 - Sunday Telegraph London
Author(s): Sylvia Pfeifer
OFGEM, the energy regulator, has sent one of its senior executives on
a mission to Europe to find out from gas suppliers how much gas they are
likely to be able to supply to Britain this winter.
The move is intended to ensure that the UK, which has endured tight
supplies during recent winters, is fully prepared for the coming cold
season. Security of supply is assuming increasing political importance,
especially ahead of the publication next month of the Government's
energy review. Britain is also becoming increasingly dependent on
imports as it runs out of its own supplies of North sea gas. Wholesale
gas prices soared last winter, partly as a result of market
uncertainties about the availability of gas from the Continent.
According to Ofgem, British customers paid almost pounds 1bn more for
gas last winter because the gas pipeline between Britain and Belgium had
been operating at less than full capacity.
In an interview with The Sunday Telegraph, Sir John Mogg, the
chairman of Ofgem, said: "Our managing director, Steve Smith, has been
going to see gas suppliers throughout Europe to find out from them, in
anticipation of a tight winter . . . what they see as the possibilities
in terms of supplying gas into the UK market.''
Mogg indicated that supplies in the coming winter were likely to be
equally tight.
"We have not given a message of being comfortable because . . . what
is important for any regulator is to give it as it is,'' he said.
Nevertheless, Mogg stressed that with new storage capacity as well as
new pipelines being built, more supplies would be coming on stream.
"The picture is going to be tight, but the general appreciation at
this stage is that if everything happens, we start to get to a very
healthy position with regard to supplies,'' he said, adding that "we are
more aware of constraints on supply than we were last year''.
Mogg, who is also the chairman of the European Regulators' Group for
Electricity and Gas and president of the Council of EU Energy
Regulators, said he was convinced that Brussels was "strongly''
committed to an open energy market. Ofgem has previously expressed
concern about the levels of competitiveness and transparency in energy
markets in continental Europe.
"Is there a political will on the side of the commission [to open up
the energy market]? My judgement is, there is,'' said Mogg.
He hailed the recent raids on European energy companies suspected of
anti-competitive behaviour. The raids last month followed suspicions
that the companies had restricted access to pipeline and storage
facilities.
"[This] is a clear message to the industry that they [the European
Commission] are serious and that they have information . . . The next
stage, if there is to be a next stage, will be the statement of
objections.'' If found guilty, the companies could face hefty fines.
According to Mogg, the more Europe's energy markets become
integrated, the more Britain will become involved in it.
"The more our gas declines, the more legislation comes from Europe,
the more we are involved and the more integrated the market becomes, the
more opportunities there are for UK firms to be over there in what is
generally a closed market.''
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