UK Industry Welcomes Parliamentary Probe

Major UK industrial energy users and employee organisations represented by the Gas Security Group (GSG) have welcomed the decision of the House of Commons Select Committee for Business, Energy and Industrial Strategy (Beis) to investigate the problems surrounding UK gas security. There will be an evidence session October 31.

In a statement October 16 announcing the development, GSG said a survey of major industrial energy users in September 2018 revealed that an overwhelming majority agreed with the following statements on the threats to energy security: 

• “Brexit and the possible withdrawal of the UK from the Single Energy Market (IEM) will seriously increase the threat of gas and electricity disruptions and increase energy costs” - 64% in agreement
• “The fall in UK gas production and increased dependency on imported gas will seriously increase the likelihood of gas supply disruptions and increase energy price volatility” - 96% in agreement
• “Supplies of gas via Norwegian and EU pipelines and via LNG shipments cannot be relied upon to deliver gas when it is most needed” - 85% in agreement
• “More UK gas storage capacity would reduce the threat of gas supply shortages and mitigate the associated volatility in both gas and electricity prices” - 100% in agreement

The GSG is keen to know what action the government might take to reduce the threat of gas shortages and their impact on customers of increasing gas and electricity prices, it said.

In March 2018, the gas industry was on the verge of suffering cutbacks in essential gas supplies and some electricity generators were curtailed. Both wholesale gas and electricity prices rose to record levels, and the situation has been exacerbated by the closure of Centrica’s Rough gas storage facility.

One year ago, the GSG predicted the likelihood of such a crisis but government and officials argued that the gas system was robust and could cope with bad weather and high energy demand. "The 'Beast from the East'  March 1 proved that this was not the case," said GSG.

Events over last winter (2017/2018) and public debate of the issue has prompted Beis to undertake an internal review but the prospect of further gas supply disruptions thanks to Brexit, among other factors, and the need for a change in policy means that the Commons Select Committee inquiry is very timely.

In addition of those who agreed that the government should intervene to underpin existing and new investment in gas storage, the majority (60%) said that they would be prepared to pay more for their gas supplies to increase security and meet the costs of additional storage capacity.

Commenting on the inquiry, GSG said: “Gas has a major role to play in providing heat and power in the foreseeable future and ensuring continuity of supply at an affordable price is critical to the future well-being of the UK economy and consumers. Gas security is an issue that requires the immediate attention of policy-makers and the GSG is looking forward to the opportunity to present written and oral evidence to the Select Committee.”

Britain's energy regulator Ofgem said October 12 that the 'Beast' drove heating demand in March 2018 to its highest level since 2010 but that gas and power networks proved resilient in meeting it. 

A spokesman for the select committee, which is chaired by Rachel Reeves (Labour, pictured below), told NGW that the inquiry would give industry the chance to test the government's views on investment in storage and pipelines. So far, Beis has been confident that there is plenty of flexible supply available and the market has proved competent at balancing supply and demand at manageable prices. 

A separate select committee is investigating the impact of Brexit on UK energy security but as the terms of separation are undecided, there have been few conclusions reached.

Reeves (Photo credit: UK Parliament)