Centrica Shelves £1.5bn Gas Storage Plans

Written By Unknown on Senin, 23 September 2013 | 18.56

Britain's attempts to keep the gas supply from hitting dangerously low levels has been dealt a blow by British Gas owner Centrica after it shelved plans for two storage projects at a cost of £240m.

The country came within six hours of running out of gas in March after the prolonged spell of cold weather and there were warnings at the time that supply could be affected.

Centrica's decision to ditch the gas storage plans will leave the UK with only around 15 days of gas supply in storage - and make the country increasingly reliant on imported gas.

Germany has around 99 days of gas storage capacity and France has 122 days of supply.

The energy firm had planned a £1.5bn conversion of the Baird depleted gas field off the North Norfolk coast, which would have held 13.5 days of gas on peak demand.

It would have become Britain's second-biggest gas storage site and the projects would have created 1,000 construction jobs.

It also put on hold indefinitely its much smaller project to convert a depleted gas field at Caythorpe in East Yorkshire into a storage facility.

Michael Fallon Michael Fallon has ruled out subsidies for storage schemes

Centrica had already spent £240m on acquiring the two sites, plus engineering costs.

The firm said the decision was taken after the Government announced it would not subsidise new gas storage projects.

Centrica said: "This decision was taken in light of weak economics for storage projects and the announcement by the UK Government on September 4 ruling out intervention in the market to encourage additional gas storage capacity to be built."

Centrica commissioned two reports on gas storage, which found subsidising it would have added between 40p and 80p a year to customers' bills over 25 years.

Energy minister Michael Fallon argued the decision not to subsidise gas will save consumers £750m over a decade.

A spokeswoman for the Department of Energy and Climate Change said: "The UK has the capacity to deliver twice the amount of gas required on a normal winter's day, and has coped well with recent extreme winter conditions. Gas storage, while important, only provides a small proportion of UK total supply.

"Subsidising storage risks adding significant costs to consumer bills, with the costs of the subsidy outweighing any benefits to security of supply."

Centrica is also reportedly planning to add an average of £100 to annual bills despite vowing earlier this year to use an earnings windfall from the cold weather to keep a lid on tariffs.

Earlier this year Centrica also pulled out of plans to build the next generation of new nuclear power plants in the UK, leaving French utility EDF to go it alone.

It comes as a report found that a third of households would like to change their energy provider for a firm offering a cheaper deal but are put off of doing so by the time it takes to switch.

According to independent provider First Utility, if a third of households in the UK did switch they would save £1.5bn on their energy bills.

Richard Lloyd, executive director of Which?, said: "Rising energy prices are consistently one of the top worries for consumers, yet we've found people are so bamboozled by the vast array of tariffs that consumers are paying a staggering £3.9bn a year more for their energy simply by not being on the best deals.

"People should switch to save, we've long called for faster, smoother switching."


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