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Gas Industry

Volume 450: debated on Thursday 19 October 2006

As confirmed by the recent energy review report, we remain committed to a market-based approach, operating within a regulatory framework determined by our policy objectives and overseen by an independent regulator.

The world gas price is only one element of the cost to a supply company. What action is the Minister taking, with the regulator, to ensure that a 30 per cent. increase in the price of gas does not lead to an opportunistic 30 per cent. rise in a customer’s bill?

The regulator Ofgem has recently made strong statements to the effect that it is keeping a very close eye on this. A bit of a time period elapses before wholesale prices can affect the consumer, but I agree that gas prices are coming down at the moment. We cannot predict what they will be in the future, but we back the regulator in adopting a strong regulatory approach to the problem.

Is not the real problem faced by the gas industry the failure of the market in mainland Europe to deliver gas to this country through the pipelines at times when prices here have suggested that it should? What progress is being made in the EU to ensure that all member states actually deliver what they signed up to on energy market liberalisation?

Steps are being taken to put principle into practice in respect of market liberalisation. The UK Government have led the charge on that and we have seen strong action from one of the commissioners, who initiated dawn raids on companies. Let us also remember that, with the opening of the Langeled pipeline, we will soon have about 20 per cent. of our future gas supply coming in from Norway, with liquefied natural gas coming in from Qatar to the tune of another 20 per cent. Continental Europe is important, but we are certainly not putting all our energy eggs in one basket, which would be the wrong thing to do. We are doing the right thing.