The Chancellor’s vision of a UK “gas hub” that would reduce costs for consumers has backfired, with new analysis showing households are paying more for gas than they should be because of the way UK to Europe pipelines are being run (1).
Two interconnectors link UK and European energy markets. They’re supposed to benefit consumers by ensuring gas flows from the lower priced market to the higher priced market.
But an Ofgem investigation and new analysis by Greenpeace suggests that rather than helping bill-payers, the pipelines are undermining security of supply. Data shows that rather than imports to the UK rising when demand and prices are high here, much-needed gas is instead flowing to Europe.
On two fifths of the days between December 2011 and October 2012, gas flowed the “wrong” way, i.e. it was exported to the continent despite the wholesale price on the day being higher in the UK.
During last winter’s cold snap the pipeline failed to import any significant or sustained amount of gas to the UK.
Greenpeace Energy Campaigner Leila Deen said: “This is yet another example of the dark and murky world of UK gas pricing.
“The Chancellor’s proposed dash for gas will leave consumers even more open to exploitation by gas companies. More gas won't lower bills - it'll just fatten gas companies’ profits. The best thing George Osborne could do for hard pressed Britons is reduce the UK’s reliance on expensive, polluting gas and instead invest in clean, homegrown renewable energy.”
Ofgem says that when gas flows against price signals “the role of interconnectors in security of supply is undermined, since it may result in additional gas being exported from a market facing a gas shortage.”
“Initial analysis suggests that the links are not always being used efficiently and we need to establish what is causing this. It is vital that gas on these links flows in line with market signals - to ensure security of supply for customers,” Ofgem said in a statement.
ENDS
(1) http://www.guardian.co.uk/business/2013/feb/05/britain-exports-gas-lower-price?CMP=twt_gu
